Wash-Out Round

Dictionary Says

Definition of '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".
Investopedia Says

Investopedia explains '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.

Articles Of Interest

  1. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.
  2. Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies, or the boot for investors. Find out how to tell the difference.
  3. IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.
  4. Top 4 Financial Jobs You Can Do From Home

    You don't have to go to an office to make a great salary in the financial sector. Here are the top four highest paying financial jobs you can do from home.
  5. Key Steps To Building A Great Financial Planning Practice

    Following the status quo will kill your financial practice. Find out the tips you need to follow to keep you a step or two ahead of the competition.
  6. Regression Basics For Business Analysis

    This tool is easy to use and can provide valuable information on financial analysis and forecasting. Find out how.
  7. Uncommon Jobs For Your Finance Degree

    Not everyone can land the glamour jobs, but the world of finance has a lot more to offer. Here are some uncommon jobs in finance that you might want to consider.
  8. Freelancer Or Employer: Identifying Your Next Career Move

    Although the increasing accessibility of independent contracting has created job opportunities, it is important to remember that this method of working also has considerable disadvantages in ...
  9. Social Finance Careers: Creating A Better World

    A financial career can be used to do more than just bring in profits. Find out how to get a career with a more social objective.
  10. How Summer Businesses Survive

    Seasonal businesses face particular challenges. Find out how they survive through the cold months.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Network Effect

    A phenomenon whereby a good or service becomes more valuable when more people use it. The internet is a good example...
  2. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...
  3. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.
  4. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.
  5. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.
  6. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...
Trading Center