Helen Gerrard and Fiona Morris spoke at our General Counsel Know-How series on convertible debt instruments.
Read some quick takeaways from the session below and you can watch the full recording of the session here.
What are Convertible Debt Instruments?
Convertible debt provides businesses with flexible financing by allowing loans to convert into shares upon specific events, offering a quicker and less costly alternative to full equity fundraising.
Advantages of Convertible Debt
Businesses benefit from upfront cash flow, a streamlined process, and flexibility in negotiating valuation and equity allocation, making it ideal for bridge financing or quick cashflow needs.
Potential Challenges
Convertible debt can lead to complex negotiations over valuation caps, discounts, and share dilution, impacting future financing rounds and investor dynamics.
Key Clauses to Consider
Essential terms include conditions precedent, drawdown procedures, interest rates, repayment terms, and conversion triggers, ensuring clarity and protection for all parties involved.
Investor Considerations
Investors should understand terms related to valuation, liquidation, and share allocation, as well as tax implications and the rights associated with their converted shares.
About Ignition Law’s General Counsel Know-How series
Ignition Law’s General Counsel Know-How webinar series delivers technical legal insights designed to make a real impact. Originally created to upskill our team, we found these sessions would provide valuable guidance for in-house counsel, seasoned entrepreneurs, and business leaders too—so we now ask our clients and network to join as well. Focused, practical, and technical, these webinars help you navigate legal challenges and stay ahead.
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