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.

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Metrics in this report

Preferred to Common Stock Discount

10-25%%

typical range

When buying out founder shares at preferred stock price