Liquidation Preference

Liquidation Preference specifies which investors get paid first and how much they get paid in the event of a liquidation event, such as the sale of a company. Liquidation preference helps protect investors by making sure they get their initial investment back before other parties. Preferred stockholders have preference over common stockholders.

Learn about the relationship liquidation preferences play with convertible notes, and suggestions for ensuring the equity matches the amount of the initial investment, on our blog here

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