Legal Resources for Businesses at Any Stage
How Does Dilution Work?
At the outset, dilution is the process of pro rata deduction of ownership percentage as additional holders are added to a company’s capitalization chart. Dilution happens as the number of shares held by a person is static while the total number of outstanding shares (the denominator) grows (e.g. 1/1 = 100% | 1/10 = 10% | 1/100 = 1%). If you bring investors or others onto your company’s cap chart dilution is unavoidable...