"I saw terms recently that had a 2x liquidation preference (i.e. the investors got the first 2x their money out of the company when it exited) and a 3x liquidat

"I saw terms recently that had a 2x liquidation preference (i.e. the investors got the first 2x their money out of the company when it exited) and a 3x liquidation cap (i.e. after they made 3x their money, they didn’t get any more of the proceeds)." Can someone explain mechanically what this means? i.e. What is the payoff under each scenario? Edit: this link seems to explain it well http://www.businessinsider.com/how-liquidation-preferences-work-2014-3?IR=T http://www.businessinsider.com/how-liquidation-preferences-w...