Liquidation Preference

Term Main definition
Liquidation Preference
A feature and provision of preferred stock. A liquidation preference is the right of a holder of the securities with the preference to receive, in priority to amounts distributed to other (common and junior) securities holders, a specific amount (called a preference) if the company is liquidated (or deemed to be liquidated) or if its stock is redeemed. The liquidation preference is usually fixed at the original investment amount, plus accrued and unpaid dividends, or may be fixed at a multiple of that amount See Liquidation, Multiple Liquidation Preference, and Participating Preferred Stock.