Full Ratchet Adjustment
Method of total protection from Dilution which protects an investor’s shareholding percentage from decreasing as a result of new shares being issued to other investors at a lower price (see Downround). Under a Full Ratchet Adjustment, Preferred Shares held by the protected investor are converted into Ordinary Shares at lower (ratcheted-down) price per share offered to the Downround investors. The effect can result in heavy Dilution for the Founders. See also Weighted Average Adjustment.