Denver Contract Attorneys & Lawyers

How Callable Preferred Stock Works

Callable preferred stock is simply preferred stock that can be repurchased or redeemed by the issuer business - in this case, your business.  The issuer has the option to repurchase the stock according to terms set out in the prospectus, a special type of contract that covers an investment offering.

Callable preferred stock is the “best of both worlds,” so to speak - with callable preferred stock, you can enjoy the benefits of both equity and debt financing while avoiding the drawbacks. When you issue callable preferred stock, you can raise funds without having to make loan payments or give up a permanent stake in your company.

There are four key terms related to the issuance of

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Common Equity: What Is It?

Common equity is the total amount of all investments in a company made by common equity investors, including the total value of all shares of common stock, plus retained earnings and additional paid-in capital. The measure of common equity does not include the value of preferred equity, that is, the value of preferred stock or any other related interest (limited liability units, or limited partnership interests) with preferred equity status.   

Issues regarding equity investment in a company can be complicated. Potential investors are strongly advised to

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What Is Recapitalization?

Recapitalization happens when a company undergoes a restructuring of its financials. When this occurs, debt and equity are re-assessed and re-allotted. Usually, the goal is to improve the company's overall stability or status. Recapitalization may also be done in an attempt to optimize the company's structure for its capital. It generally occurs with the exchange of one type of financing for another. For example, shares may be exchanged for bonds.

Recapitalization is the way to organize a corporation's capital structure, including stock ownership and the rights and liabilities connected to each class or genre of stock. For shareholders of a business held together, this type of recapitalization is a nuanced, progressive strategy. In this sense, when undergoing recapitalization, a business

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Updated October 26, 2020:

What Are Non-cumulative Dividends?

Non-cumulative dividends refer to a stock that doesn't pay the investor any dividends that are omitted or unpaid. Dividends are payments made to shareholders and can be preferred or common. Preferred refers to stock that is paid before common stockholders, and it has a more predictable income.

A non-cumulative dividend is a type of preferred stock that does not owe any missed payments. Dividends are payments a company distributes to its shareholders. Preferred stock receives priority over common stock. This occurs regardless of the stock is cumulative or non-cumulative.

Preferre

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Pre-Money Valuation: What Is It?

Pre-money valuation (PMV) is the initial value of a company before any type of investment. The capital a business receives after its pre-money valuation is called post-money valuation.

Why Is Pre-Money Evaluation Important?

• PMV determines the value of company shares.
• Through PMV, an investor can determine the value of a company's shares.
• Through PMV, anyone can calculate the total value of a company.
• Using PMV, the parties involved with an investment can determine how much of the company each party controls after the investment.

How Pre-Money Evaluation Works

Think of PMV as a simple calculation that investors use to weigh the value of becoming a shareholder. A company with a PMV of $10 million that has 1 million shares has value of $10 per share. W

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