Broad-Based Weighted Average Anti-Dilution
Definition
An anti-dilution mechanism that adjusts the conversion price of preference shares based on a weighted average of the old price and the new lower price, weighted by the number of shares outstanding at each price. This mechanism produces a moderate conversion ratio adjustment that is shared between the protected investor and existing holders. Broad-based weighted average anti-dilution is the standard provision in most institutional investment documents.
Common Misapplication
The most common misapplication is failing to distinguish between broad-based and narrow-based weighted average anti-dilution when reviewing investment terms. The broad-based formula includes a larger share count in the denominator, producing a less severe adjustment than the narrow-based formula.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.5: The Liquidation and Exit Mechanics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Broad-Based Weighted Average Anti-Dilution. https://ffistandard.org/glossary/broad-based-weighted-average-anti-dilution/. 2026.