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The article makes it sound like a liquidation preference is some new phenomenon that explains the recent surge of ostensible $1B valuations. In fact this has be
by mode80 11y ago
The article makes it sound like a liquidation preference is some new phenomenon that explains the recent surge of ostensible $1B valuations. In fact this has been a standard deal term since the 90s.
- myth_buster 11y agoJust because it existed in the past shouldn't discount it's effects in the present as evidenced in the side effects of medicines.
- ClintEhrlich 11y agoThe fact that liquidation preference has been standard in term sheets for decades mean that its advent cannot have caused the recent inflated valuations. But the way that VCs are employing liquidation preference may have changed. For example, the liquidation-preference term may have increased in importance if IPOs are becoming less common relative to other liquidation events or if out-of-control valuations mean that liquidation-preference is a more important form of protection than it used to be.
- myth_buster 11y agoI agree with you. My argument was against altogether discouting Liquidation Preference as a suspect in higher evaluation by stating its existence in '90s.