Liquidation Preference

Liquidation preference determines the order of payments to shareholders in the event of a company liquidation. This provision ensures that preferred shareholders receive their investment back before common shareholders in case of liquidation. Liquidation preferences are common in venture capital and private equity deals, providing protection for investors in high-risk ventures.

• Determines payment order in liquidation.
• Protects preferred shareholders.
• Common in venture capital and private equity.
• Ensures investor protection in high-risk ventures.