equity-ownership-structure

Vocabulary Word

Definition

The term 'equity ownership structure' refers to the distribution of equity, or ownership, in a company. It shows who owns the company's shares and what proportion they hold, providing a clear picture of who controls the company.

Examples in Different Contexts

In startup formation, establishing an 'equity ownership structure' is vital for defining the roles and expectations of founders, investors, and employees. A startup founder might discuss, 'Our equity ownership structure is designed to incentivize our team while providing clear exit strategies for investors.'

Practice Scenarios

Business

Scenario:

We have multiple investment offers for diversifying our funding. It means adjusting our current ownership structure.

Response:

Adapting our equity ownership structure might be necessary, but we need to ensure all existing shareholders are considered.

Startup

Scenario:

We've been discussing the proposed investment terms from our new funding round, which might change our current cap table.

Response:

While updating the cap table, we should ensure our equity ownership structure remains balanced and fair to all stakeholders.