SaaStr · 2024-07-01
· 702d
Pricing Founder Share Buyouts: Common vs. Preferred Stock Valuation
This article addresses the question of what price to use when buying back shares from founders who have left a company. It presents two main paradigms: using common stock price based on 409a valuations, or using preferred stock price with a discount. The choice depends on transaction structure, timing, and market demand in subsequent VC rounds.
Metrics in this report
Preferred to Common Stock Discount
10-25%%
typical range
When buying out founder shares at preferred stock price