By issuing convertible debt,the entrepreneur will become the minority stockholder and lenders will assume control over how the company is run.

Question

Quizplus · Accepted Answer

Convertible debt typically does not result in a change in control over the company. They are still considered debt, even if they can be converted into equity at a later time. However, if the entrepreneur is unable to repay the debt, the lenders may have the option to convert the debt into equity and may become majority stockholders in that scenario.

By Issuing Convertible Debt,the Entrepreneur Will Become the Minority Stockholder