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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10629
Experience:  30 years of corporate, litigation and international law
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I left a privately held internet tech company in 2012, buying

Customer Question

I left a privately held internet tech company in 2012, buying all of my stock options on the way out.
On June 1, the largest preferred shareholder (they were a Series A investor in 2006), converted all of their preferred shares to common stock.
Do you see this an an indicator of an impending positive liquidity event?
Submitted: 2 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 2 years ago.
Were the preferred shares receiving guaranteed payments or was the preference solely related to liquidation of the company?
Customer: replied 2 years ago.
Not sure, but they were receiving the standard dividends that preferred stockholders get. I don't have extensive info on the details...just looking for an opinion on this transaction and what it typically indicates.
Expert:  Richard - Bizlaw replied 2 years ago.
If the preferred shareholders were receiving dividends that were not being paid to common shareholders, then the conversion from preferred to common might presage a liquidity event but there is no guarantee. The preferred shareholder may have been asked to help ease a cashflow burden by converting from preferred to common. If I have answered all your questions, please positively rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus. I have to step away so if you have more questions I will respond when I get back.
Expert:  Richard - Bizlaw replied 2 years ago.
I was just checking to see if you had any questions.
Customer: replied 2 years ago.
No. But it's really vague. I was looking for a bit more detail on what is most common.Thanks, ***** ***** the service was a little more comprehensive. I will contact a local attorney.
Expert:  Richard - Bizlaw replied 2 years ago.
Unfortunately, all you have is one action with no additional information about the company or its current status. Consequently, there is nothing concrete on which to base an opinion as to what the company's intentions are.