Module V· Contribution Analysis & Shareholder DilutionIntermediate
Question

What is an ownership floor, and why is it critical in pre-emptive rights structures?

Answer

An ownership floor guarantees a shareholder minimum ownership after a transaction or financing. It matters when pre-emptive rights, anti-dilution protections, or governance thresholds are tied to ownership. In M&A models, ownership floors can require additional share issuance, cash alternatives, or governance concessions and can limit deal flexibility.