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 …



Q&A About Wash-Out Round


What is another name for this type of financing?

Another name for this type of financing is burn out or cram down rounds.

Why do new investors usually take control in a wash-out round?

Because previous owners are desperate for more financing and need it immediately or they will go bankrupt.

Why did he invent it?

He wanted to create an alternative to the double-elimination format that was commonly used at the time, because he believed that double elimination tournaments were too long and boring to watch and play in, especially when there were many competitors playing at once. He also felt that his new format would be more exciting for spectators than other formats, as they could see who had won each match immediately after it ended instead of waiting until all matches had been completed before knowing who won or lost overall (as happens with most other formats).

What does Wash-Out Round stand for?

Wash-Out Round stands for a type of elimination tournament in which players are eliminated after a single loss.

Do online poker sites offer these types of games ?

Yes , some online poker sites offer these types of games .

Who uses this format today ?

Today , many professional poker tournaments use this format .

Who invented this type of tournament?

This type of elimination tournament was invented by John Scarne.

What is a common round of financing to owners of small companies?

A common round of financing to owners of small companies that are not yet financially stable.

Are there any disadvantages to using this format over others ?

There are several disadvantages associated with using this particular format over others . First , if you

When did he invent it?

He invented it in 1945.

How do you win a game in this type of tournament?

You win by defeating all your opponents.

What does the term "dilute drastically" mean?

Dilute drastically means to reduce by a large amount.

How does one qualify for these types of competitions ?

One must have enough money to enter them .

In what types of competitions do they use this format ?

They use it primarily in no limit Texas hold ' em tournaments .

Who often takes control in a wash-out round?

New investors take control in a wash-out round.

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