Strategic deals
How strategic equity deals work
A strategic equity deal is one where the equity is not the whole point: a corporate investor also wants a commercial relationship, two companies take stakes in each other, or equity is issued as milestones are met. The ownership consequences arrive later than the handshake, which is why the agreed terms need to be recorded precisely and immutably.
Prepared by Perseids · Published · Updated
Common structures
| Structure | What happens | Ownership effect |
|---|---|---|
| Strategic investment | Corporate invests, often with commercial terms attached | Dilutive primary issuance |
| Reciprocal equity | Two companies take positions in each other | Dilutive on both sides |
| Joint venture | A new entity is formed with defined contributions | Ownership in the new entity |
| Milestone equity | Equity issued as defined events are met | Staged dilution over time |
Strategic investment
- What happens
- Corporate invests, often with commercial terms attached
- Ownership effect
- Dilutive primary issuance
Reciprocal equity
- What happens
- Two companies take positions in each other
- Ownership effect
- Dilutive on both sides
Joint venture
- What happens
- A new entity is formed with defined contributions
- Ownership effect
- Ownership in the new entity
Milestone equity
- What happens
- Equity issued as defined events are met
- Ownership effect
- Staged dilution over time
What tends to go wrong
- Milestones defined loosely enough that both sides read them differently.
- Commercial terms and equity terms negotiated by different people and never reconciled.
- Later renegotiation that overwrites the original agreement with no record of what changed.
- Contingent equity omitted from the fully diluted cap table until it is issued.
How to keep control of it
- 1Model the structure before signing, including the fully diluted effect at each milestone.
- 2Record agreed terms so they cannot be silently edited later.
- 3Track milestones explicitly, with the ownership consequence attached to each.
- 4Keep participants in a scoped deal space with an explicit approval path.
- 5Issue equity only when an approved milestone is actually met.
Prepared by Perseids for general information. It is not legal, tax or investment advice — confirm your specific situation with your advisers.
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