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How does liquidation preference work, when companies go IPO?
by ram_rar 7y ago
How does liquidation preference work, when companies go IPO?
- sidlls 7y agoFor employee shareholders of common stock, their stock has the same market value that anyone who's buying for the first time through a broker sees. It's not like they are going to be forced to hand over proceeds of sales on the market back to investors.
- yumraj 7y agoAt an IPO the preferred stock holders have an option to convert to common stock, which they invariably take. It's specified in the term sheet. As such after the IPO all stocks are common stocks which are valued at the market price.
- techslave 7y agoit doesn’t apply