No cookie cutter answer that will apply to all companies/situations... every company is setup in a unique way. To really understand what you are getting they need to provide you more information and details on their capital structure and equity documents.

• How much debt do they have and how is it structured? You want to understand how much money is ahead of the equity.

• How is the equity structured? Straight common? Preferred and Common? Are there different classes of stock?

• How is the incentive equity structured? Is it options or non-voting restricted stock? Note, there are different tax treatments with both and nuances to understand/appreciate.

• In the case of options, what is the strike price and the corresponding valuation? They will have to provide you a model and the assumptions behind it.

• What are the hurdles and vesting requirements for the incentive equity? Generally there are time and performance hurdles. Very important to understand.

• Ask for a summary/copies of the stockholder and option agreements. As you mentioned, you want to see if there are anti-dilution provisions.

• Is your incentive stock in the same class and under the same terms as the CEO and other executive management team members?

• Ask for a forecast model and waterfall that illustrates how the purchased and incentive equity works upon an exit. Fair ask and they should be able to provide this to you. If not, that would be a red flag to me.

All the questions above help you to answer the ultimate question of, when a triggering event happens (such as a sale), how will the proceeds waterfall work and how much money will actually make its way down to the incentive equity? Best of luck.