Liquidation Preference
A Pre-IPO investment term stipulating that, upon a company acquisition, liquidation or specified exit event, preferred shareholders have the right to recover funds at an agreed multiple ahead of common shareholders, with only the remainder distributed to common shareholders.
Timeline (last 90 days)
The valuation of an unlisted company comes from the per-share price agreed upon in primary-market financing, usually accompanied by preferred stock terms, liquidation preference and anti-dilution protection, and the value of common stock is often significantly lower than that price.
Terms such as the difference in rights between preferred and common shares and liquidation preference affect the final realized value.
Across multiple funding rounds, the liquidation order of each round's preferred stock is usually arranged on a "last in, first out" basis, with later investors enjoying higher priority.
All Facts (3)
The valuation of an unlisted company comes from the per-share price agreed upon in primary-market financing, usually accompanied by preferred stock terms, liquidation preference and anti-dilution protection, and the value of common stock is often significantly lower than that price.
50%UnverifiedTerms such as the difference in rights between preferred and common shares and liquidation preference affect the final realized value.
50%UnverifiedAcross multiple funding rounds, the liquidation order of each round's preferred stock is usually arranged on a "last in, first out" basis, with later investors enjoying higher priority.
50%