OpenAI and Microsoft are negotiating with investment banks regarding equity conversion issues

ChainCatcher news, OpenAI and Microsoft are engaged in a high-stakes negotiation over an unprecedented issue: how to convert a nearly $14 billion investment in a nonprofit organization into equity in a for-profit company. OpenAI recently completed a funding round, valuing it at $157 billion, as it transitions from a nonprofit organization to a for-profit company.

One of the biggest challenges it faces when becoming a for-profit company is how to allocate equity. As OpenAI's largest investor, Microsoft could end up with a significant share of the company. Given the importance of the negotiation outcomes for both Microsoft and OpenAI, both companies have hired investment banks for advisory services.

Microsoft is collaborating with Morgan Stanley, while OpenAI has chosen Goldman Sachs. In addition to determining how much equity Microsoft will hold after the restructuring, it is also necessary to clarify what governance rights Microsoft will possess.