AlphaTakes – Liquidation Preferences

In this AlphaTakes video, Matt Storms discusses the basics concerning liquidation preferences. He provides a summary of the different types of liquidation preferences that are typically negotiated in emerging technology company transactions. He also provides a spreadsheet illustration of the effects of the different types of liquidation preferences.

Here are the key takeaways from this video:

    (1) A liquidation preference is a right to all or a portion of the assets of a company upon its sale over the rights of others

    (2) The three most common types of liquidation preferences for an emerging technology company are

    (a) non-participating preferred (most common in early stage deals)

    (b) participating preferred

    (c) participating preferred with a cap

    (3) Liquidation preferences are important

 


One thought on “AlphaTakes – Liquidation Preferences”

  1. Very well done. Explains terminology in a way that a novice entrepreneur like myself can understand. It takes a lot of effort to make something complex sound simple. Good work – I found it very helpful.

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