“Comment, question or quotation of the day”

23-03-2018 : Problem for the week end

  You are a shareholder of a promising start-up and have subscribed to a convertible bond that will be converted into new shares during the next round of financing at a discount of 15% on the issue price of the shares of that next round of financing. Unfortunately, a material error was made in the minutes of the meeting authorizing the future issue of shares resulting from the conversion of convertible bonds, by providing for a number of shares issued in this respect equal to the number of convertible bonds, and not at that number divided by 1 minus the 15% discount. This kind of thing happens and nobody saw it at the moment. Fortunately for you, the convertible bonds contract is very clear and mention for a conversion of the bonds on the basis of the new share price discounted by 15%. Your lawyer, very embarrassed, offers to correct the situation by converting on the basis of the amount of convertible bonds, increased by 15% and divided by the price of the new shares.   What do you think of his/her suggestion? Have a nice day

22-03-2018 : Quote of the day

“Managers and shareholders should remember that accounting supports analysis, but can in no way replace it” 
Warren Buffett


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The Vernimmen.com Letter

Number 110 of February 2018

News : Managing the risk, returns and voting rights of a stake in a listed company

Statistics : Exit EBITDA multiples in M&A for 2017

Research : IPOs: the virtues of bookbuilding

Q&A : What is the reinvestment risk for a fixed-interest bond?