A Mandatory Redemption is a provision that requires a company to repurchase (redeem) certain securities—often preferred stock—at a specified time or upon specified conditions, subject to legal limitations on available funds. In VC terms, Mandatory Redemption is a liquidity backstop for investors, and Mandatory Redemption rights can influence leverage in exit discussions and the company’s long-term capital planning.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.
