Business Pitch Dictionary by pitch.dog
Term-sheet economics · Working

Redemption right

Also called: redemption

ELI5

Investors may force the company to buy back their shares later.

Used in conversation

“Redemption rights can create a future cash obligation.”

Definition

A right allowing investors to require the company to repurchase shares under stated conditions and timing.

Here “Redemption right” means: A right allowing investors to require the company to repurchase shares under stated conditions and timing.

Pitch context

You will see “Redemption right” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches term-sheet economics.

Why it matters: In term-sheet economics, 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.

Sources & evidence · 5

Direct term-level sources and supporting source families.