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descriptionIssue Brief
Posted on: 6/05/2016
Your Piece of the Pie: Understanding the Valuation Impact of Multiple Share Classes
Why do companies end up with multiple classes of equity? Sometimes the reason is financing. Other times, it’s a management incentive. Yet another reason is to give some shareholders greater voting or control rights.
Whatever their purpose, the fair value of alternate share classes is a challenge to measure. This Issue Brief presents two ways to allocate value between common and convertible preferred shares.
