The Essential Guide to Liquidation Preferences

A liquidation preference gives the VC investor a "first right" to any proceeds available to shareholders in the event of a liquidation or trade sale of the company. Although a liquidation preference provides the VC investor with downside protection by giving them the first money out of the company that is paid to shareholders, it can also significantly increase the upside to an investment.

5 minute read September 03, 2003 at 12:39 AM
By
Christopher A. Grew
The Essential Guide to Liquidation Preferences

A liquidation preference gives the VC investor a “first right” to any proceeds available to shareholders in the event of a liquidation or trade sale of the company.

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