Exploring Liquidation Preferences and Dirty Term Sheet Structures

In Part II of our series on term sheets, Closing Time co-hosts Halle Tecco and Michael Esquivel unpack "clean” and “dirty” terms in startup financing. 

With the pressure to maintain high headline valuation numbers, investors often grant founders their desired valuations while sneaking in terms that our resident lawyer Michael does not like. 

The episode breaks down the nuances of terms like liquidation preference, liquidation multiples, cumulative dividend structures, anti-dilution provisions—and the trade-offs founders must consider between valuation and terms.