3 ms·

liquidation preference?

• deleted 12y ago
  [deleted]
• late2part 12y ago
  Liquidation is usually the multiple of the investment money, that the investor gets back before anyone else gets their money. Like earlier explained, later investors generally get senior rights to earlier investors; so they get their money out first. https://en.wikipedia.org/wiki/Liquidation_preference https://en.wikipedia.org/wiki/Liquidation_preference
  • sukilot 12y ago
    Is there a recursive model that explains why later investors have senior preferences?
    • vidarh 12y ago
      It's simply about (real or perceived) risks. A senior liquidation preference is a way of mitigating risk for later investors by increasing the chance they can get a return on their investment, or at least their money back in the event things doesn't do great, while giving up less upside potential for earlier investors if things does go great.