How is this any different from a VC changing the terms on you at the last minute (which I am told happens routinely)?
It is just another form of re-trading a deal.
It is just another form of re-trading a deal.
Is that really uncommon when you get to the professionals? I've never had to deal with this myself but I am told that it happens all the time. You think you have a deal and then you get a last minute call that says we can't do that evaluation or we want some extra warrants. The rule I have always heard is "you don't have a deal until the check clears".
When it does happen, more often than not (at least, in most cases I'm familiar with) it was to compensate for things disclosed just prior to doing a deal. If such a disclosure does not scuttle the deal entirely the least you should count on is an adjustment. That's why you make sure there is a high level of transparency by the time a terms sheet is signed, you're in for a rough ride if you have not been up-front about any lingering issues.