Secondary Transactions – Converting Notes Into Shares Using Valuation Method

One of the most significant transactions an investor may make in a company is the conversion of notes into company shares.

Here are the steps to follow:

Step 1: Log into your Eqvista account and select your company account. 

On the dashboard, click “Securities” from the left-hand side and then “Convertible Instruments”. 

Step 2: Then, you will be directed to the below page and click “Note 2”.

Step 3: Here, you will be able to see the details of “Note 2” and click on “Actions” on the top right-hand side to get the drop-down menu. Then, click on “Convert to Stock”.

Step 4: By doing this, a new window will appear. The first step is deciding whether it will be Valuation or Price per share.

Note: You can also convert to stock using the price per share method by clicking “Price per share”. To learn how to convert to stock using price per share, check out the support article!

In this case, we selected the option “Valuation”. You will need to fill in the details such as the new share name, the security class to convert to, and the valuation along with notes, if needed. 

Then, the conversion date will be automatically filled.  If the date is not today, then you can edit that as well. As you edit the details, the right-side panel gets updated.

Note: You can see the shares amount after the conversion and the price per share based on the convertible instrument plan.

Once done, you can click on “Submit Conversion”.

Step 5: Then, you will be redirected to the page where you can see the note is converted to stock.

Step 6: If you want to see the new grant details, click on “Securities” and then on “Equities”. Once you get here, click on the “Series B” equity class since the shares were converted to this class.

For more details on the conversion, click on the grant name “SB-007”.

Step 7: When you click, you will be redirected to the page where you can see the details of this conversion.

Step 8: The record of the transferred grant can be seen by clicking “Cap Table” on the left-hand side to get a drop-down menu. Then, click on “Secondary Transactions” and you will see all the transactions – Exercises, Transfers, Note conversions, Repurchases, and Cancellations. 

On this page, click on “Conversions” to check if the note is converted.

If you want to further understand how to use the Eqvista application, check out our support articles or contact us today!