Dec 13, 2012

Capping Preferred Participation: A Compromised Compromise?

One of the more material, contentious and potentially confusing issues in negotiating venture capital term sheets is the structure of the so-called liquidation preference. Perhaps better thought of as the "exit preference" this is the term that spells out how the proceeds from a sale of the business are divided between the common shareholders and the various investors holding shares of preferred stock.
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