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    Deal Structuring

    Deal structuring is choosing the instrument and the terms of a transaction, which is the part founders live with long after the headline valuation stops mattering.

    Service within Deal Advisory

    In Growth Strategy: Execute the Deal

    How we help with Deal Structuring

    Founders negotiate valuation. The terms are what they live with.

    1. Choose the instrument

      Equity, convertible, preference or debt, each with different control, dilution and downside consequences. This decision outlives the valuation.

    2. Model what the terms do in every outcome

      Liquidation preference, anti-dilution and participation modelled across good, flat and bad exits, so the founder sees what they actually keep.

    3. Negotiate the terms that compound

      Board composition, reserved matters, drag and tag. These decide who controls the next decision, which is usually worth more than the current price.

    4. Document it so it means the same thing later

      Term sheet to definitive documents without drift, and a cap table that reflects what was agreed.

    Founders negotiate valuation. The terms are what they live with.

    FAQ

    Questions founders ask about Deal Structuring

    Why does deal structure matter more than valuation?

    Because valuation is one number in one scenario and structure governs every scenario. A higher headline price with a participating preference can leave a founder with less than a lower price with a clean one.

    What is a liquidation preference?

    The investor's right to get their money back, sometimes a multiple of it, before anyone else is paid on an exit. A 1x non-participating preference is standard; anything beyond that materially changes founder outcomes at lower exit values.

    Should we take a convertible or priced round?

    A convertible defers the valuation question and is faster and cheaper, which suits an early or bridge raise. A priced round settles the cap table and is usually right once there is enough evidence to value the company honestly.

    Can terms be renegotiated later?

    Rarely in the founder's favour. Terms set at one round become the floor for the next, because a new investor will not accept worse than the existing one has. That is why the first institutional round matters disproportionately.

    What our research says about Deal Structuring

    Under India's foreign exchange rules, preference shares issued to a foreign investor count as equity only if they are compulsorily convertible; redeemable ones are treated as debt.

    CS Manavi Arora, in Most founders don't lose control at the negotiating table. They lose it months after they've signed.

    Under Section 55 of the Companies Act, 2013, preference shares can only be redeemed out of profits available for dividend, or out of the proceeds of a fresh issue of shares made for that purpose. A company with neither cannot legally redeem, however clearly the agreement says it must.

    CS Manavi Arora, in Most founders don't lose control at the negotiating table. They lose it months after they've signed.

    A participating preference lets the investor take their money back and then also share in whatever is left, as if they had converted. Add a multiple, 2x or 3x, and a middling exit can leave founders and employees with far less than their shareholding suggests.

    CS Manavi Arora, in A term sheet is two pages. It decides the next ten years of your company.

    You haven't sent a rupee, but you've signed a guarantee so your US subsidiary can take an office lease or a credit line, and it's drawing down the same limit.

    CS Manavi Arora, in Investing outside India: ODI, LRS and the filings founders miss

    This is one of the few decisions where the structural choice matters less than the execution.

    Sriram Chidambaram, in Flip and reverse flip: what actually breaks

    Guides and downloads on Deal Structuring

    E-books and masterclass material from the SRF library, free to download.

    The people behind Deal Structuring

    Deal Structuring is run by the studio team: one multidisciplinary team whose pods work in tandem, matched to the sector and the stage the company is in.

    Haripriya V

    Investment Banking pod

    Led by Haripriya V

    Lead - Investment Banking & Business Growth. Manages transactions and strategic capital events.

    See the pod structure
    Studio TeamThe operators, investors and builders who run engagements end to end.Meet them

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