Does signing this impact my economic stake in the company?
No – this does not change your effective ownership the company, instead it allows the company to more easily manage stakeholders by consolidating many into a single line on their cap table. Some Consolidation Vehicles are also configured with a proxy or power of attorney.Does this impact QSBS?
No. It is mereley a corporate transaction to make legal and administrative tasks simpler for the company.How will future distributions work?
- For stock proceeds of a private company, the single entity for the consolidation vehicle holds the stock.
- For stock process of a public company, the single entity for the consolidation vehicle holds the stock and disburses it out to investors in-kind through a transfer to their brokerage or provides investors with the option to sell.
- For cash proceeds, the single entity for the consolidation vehicle receives the proceeds and manages the disbursement to the investors’ accounts.