Aggregator, Distribution and Participating Preferred

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Aggregator

Distribution

Participating Preferred

No Mess (Too Much Liquidation Preference)

ithacaVC

DECEMBER 14, 2011

Sometimes, after getting back the LP, the preferred holder then converts to common and gets its prorata share of proceeds left after all LP has been paid (this is called participating preferred). So, after the Series B round the company would have $13mm of aggregate liquidation preference ($3mm plus 2*$5mm).

Liquidation Preference

Liquidation Preference LP Preferred Stock Liquidity Event

What is an employee retention or M&A carveout plan?

Startup Company Lawyer

FEBRUARY 21, 2010

Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless. The company must determine whether the stock or cash distributed will be fully vested at the time of grant or will vest over time. Last Man Standing.

Retention

Retention Liquidation Preference Employee Common Stock

StartUpRoar

No Mess (Too Much Liquidation Preference)

What is an employee retention or M&A carveout plan?

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