{"ok":true,"canonical_url":"https://dealroom.so/glossary/conversion-rights","api_url":"https://dealroom.so/api/public/glossary/conversion-rights","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"conversion-rights","term":"Conversion rights","group":"Reading the business","definition":"These allow holders of certain securities, like preferred stock or debt, to convert them into common stock. They can impact your ownership and the capital structure post-acquisition.","what_it_means":"If the target company has preferred stock or convertible debt, the holders of these securities may have the right to convert them into common stock. This is a crucial area for due diligence as it affects the true equity base you are acquiring and potential future dilution. Ensure all such rights are identified and addressed in the purchase agreement, either by conversion, repayment, or termination.","url":"https://dealroom.so/glossary/conversion-rights","official_sources":[],"related":[{"slug":"options","term":"Options","url":"https://dealroom.so/glossary/options"},{"slug":"special-voting-rights","term":"Special voting rights","url":"https://dealroom.so/glossary/special-voting-rights"},{"slug":"stock-purchase","term":"Stock purchase","url":"https://dealroom.so/glossary/stock-purchase"},{"slug":"legal-structure","term":"Legal structure","url":"https://dealroom.so/glossary/legal-structure"}],"related_questions":[{"question":"Can an SBA 7(a) loan finance the purchase of intellectual property rights from a third party?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-the-purchase-of-intellectual-property-rights-from-a-third-part"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Conversion rights","url":"https://dealroom.so/glossary/conversion-rights","source_type":"DealRoom Data"}}