This article is a crosspost from SME Law.
The Liquidation Preference term is frequently used in fundraising rounds. It is a major economic term to be negotiated in the term sheet between the founders and the investors, and is arguably the preference of the preferred shares.
Definition of liquidation
A liquidation is the procedure according to which a company dissolves its business. Prior to such resolution, the company goes through a number of steps with the aim of settling all its financial obligations to third parties and distributing any excess assets to the shareholders. Such liquidation occurs with a trigger, which is commonly named a Liquidation Event.
Liquidation Events usually include:
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Read the full article at: https://www.wamda.com/2017/10/know-liquidation-preference