Participating liquidation preference trends
The inclusion of participating liquidation preferences has declined over the past year in Aumni-tracked early-stage equity financings. Conversely, the prevalence has generally increased among late-stage deals during the same period, although recent data suggests a slight leveling off.
Participating liquidation preference rights, often referred to as “participating preferred” or “full participating preferred,” ensure that investors first recoup their initial investment in a sale or liquidation event and subsequently participate in the remaining proceeds alongside common shareholders. The incorporation of this provision may indicate investors' desire for enhanced protection and returns in uncertain market conditions.
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