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Dictionary by pitch.dog
Valuation & conversion mechanics · Specialist

Conversion ratio

Also called: as-converted ratio

ELI5

How many shares one security becomes.

Used in conversation

“Anti-dilution changes the conversion ratio.”

Definition

The number of common shares received for each preferred or convertible security upon conversion.

Here “Conversion ratio” means: The number of common shares received for each preferred or convertible security upon conversion.

Pitch context

You will see “Conversion ratio” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches valuation & conversion mechanics.

Why it matters: In valuation & conversion mechanics, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

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Sources & evidence · 5

Direct term-level sources and supporting source families.