BROWSE

Wash-Out Round

What is 'Wash-Out Round'

A common round of financing to owners of small companies that are not yet financially stable. When such financing is done, the new issuance serves to dilute drastically the ownership of previous investors and owners. Often, the new investors are able to take control of the company because the previous owners are in desperate need of more financing to avoid bankruptcy.

Also know as "burn-out round" or "cram-down round".

Explaining 'Wash-Out Round'

The wash-out round is often the final financing opportunity available to entrepreneurs before a company is forced into bankruptcy. Wash-out rounds often occur when companies are unable to achieve performance levels that have been set in order to receive additional financing from investors.

Wash-outs occurred during the dotcom craze of the late 1990s when many companies were significantly overvalued.


Further Reading


Discussion of 'limited attention, information disclosure, and financial reporting'
www.sciencedirect.com [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

The crisis from the point of view of evolutionary economicsThe crisis from the point of view of evolutionary economics
www.emerald.com [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

The economic consequences of increased disclosureThe economic consequences of increased disclosure
www.jstor.org [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

Labour reallocation and productivity dynamics: financial causes, real consequencesLabour reallocation and productivity dynamics: financial causes, real consequences
papers.ssrn.com [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

The Modigliani-Miller propositions after thirty yearsThe Modigliani-Miller propositions after thirty years
www.aeaweb.org [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

A life-cycle overlapping-generations model of the small open economyA life-cycle overlapping-generations model of the small open economy
academic.oup.com [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

Overconfidence, experience, and professionalism: An experimental studyOverconfidence, experience, and professionalism: An experimental study
www.sciencedirect.com [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …

Globalization, harmonization, and competition: the different pathways to policy convergenceGlobalization, harmonization, and competition: the different pathways to policy convergence
www.tandfonline.com [PDF]
… As a result, these errors do not “wash out” in aggregate … Another way to extend the model is through multiple rounds of trading … in subsequent sections, investors are assumed to have a history of data upon which to base their trading decisions, but there is only one round of trading …


Leave a Reply

Your email address will not be published. Required fields are marked *