Glossary · Ownership
Liquidation preference
A rule that says certain investors get their money back (sometimes a multiple) before common shareholders split what is left — usually when the company is sold or shuts down.
Related: Preferred stock · Participating preferred · Exit
A bit more nuance▾
- 1× non-participating is common; higher multiples or participation can sting common holders.
- Waterfall spreadsheets model who gets what at different sale prices.
Go deeper▾
Discussion questions▾
- At what sale price do founders start to feel real upside?
- Who on your cap table has a multiple preference?
Educational reference only — not legal, tax, or investment advice. Terms vary by country and deal; ask a qualified professional when it matters.