Many economists said that extensive inventory liquidation had ended and that companies had begun to replenish stocks, something that will benefit the struggling recovery.
Compute it as the sum of the market value of common stock, the liquidation value of preferred stock and all debt, minus cash and equivalents.
I look for a minor business recession especially in certain luxury industries but this stock market liquidation should have no lasting effect on our business conditions.
It's calculated by taking the company's enterprise value (the sum of the market value of common stock, the liquidation value of preferred stock and all debt, minus cash and equivalents) divided by its operating income (earnings before interest, taxes, depreciation and amortization).
The key terms include the elimination of participation with preferred stock, a 1x liquidation preference, and single trigger vesting acceleration on acquisition.
The new Series C-2 Preferred Stock has a liquidation preference of $0.4196 per share, resulting in an aggregate liquidation preference of the Series C-2 Preferred Stock of $13 million (assuming a $7 million financing).
Hopkins explains that the convertible's seniority to common stock in a liquidation may not count for much if the whole thing goes bust.
In such cases, current stock performance determines a liquidation value well above what comes later, after the chickens have come home to roost.
There are a lot of reasons to sell a stock beyond just getting liquidation, such as paying taxes for other share options and exercises, so it's not clear exactly what the motivations are for some employees for now.
What is most interesting about the filing is that the B is a participating preferred round with a 3x Participation Cap, which means that Sequoia could have received up to 3x its investment while participating on an as-if converted basis with common stock, after its 1x liquidation preference.
