EBET Inc (EBET)

[George1234]

In a buyout, the purchaser is buying all of the common shares of stock for a price it believes to be the fair value of the company as a whole. In order to have a proper valuation of each share, it is important for the buyer to know that all of the common shares are accounted for. Many preferred shares carry convertibility options, where they can trigger a conversion from preferred into common stock. This conversion would dilute the pool of common stock and throw off the valuation of the shares in the buyout. As a result, it would generally be advisable either to value the company as if these shares were converted, or to force their conversion before the buyout.