• definition

What is an Anti-Dilution Agreement ?

An anti-dilution agreement is an agreement (or a provision) that investors often choose to insert into their ‘Term Sheet’, when specifying their requests alongside the investment. Through this agreement, investors protect their invested price per share by limiting the possibility that future investors pay less than what the preceding investor paid (per share). The Anti-dilution agreement is enforced via one of two mechanisms; the “weighted average mechanism” – the most common mechanism, or the “full ratchet mechanism” – usually considered less favorable for the company, as it may lock out other investors.

By | 2016-11-04T16:56:11+00:00 October 15th, 2016|Legal Definitions|0 Comments

About the Author:

Gal Barash
Third year Law & Government student at the IDC Herzliya. Dreams of becoming a lawyer in the entrepreneurial world and enjoys surfing, playing the guitar and travelling during his free time.