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A guarantee given to investors in a privately held company that protects them if the company's shares are not sold above a specified amount or if they are sold for less than the amount that they paid. Under the terms of the guarantee, in this situation they are compensated in some way, such as by getting more shares for free. This causes dilution to other shareholders, including employees with stock grants. Ratchet provisions are a concern for employees in unicorn companies. For more about this topic, see an article at Forbes.com.
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