All you are saying is very much correct, but it is not what I'm talking about. In the situation I'm referring to, the terms were always clean, in other words:

All you are saying is very much correct, but it is not what I'm talking about. In the situation I'm referring to, the terms were always clean, in other words: - 1x liquidation preferences for all rounds - Non-participating preferred stocks - The company sold at a valuation significantly higher than its last valuation and they still had a boatload of cash in the bank, so they strictly sold from a position of power Another HN user just commented down below adding more info to the shady practices I'm talking about, giving them the proper names: recapitalization and carve-out.