Finance & Moneyadvanced
Liquidation Preference
Definition
A term that decides who gets paid first, and how much, if a company is sold or wound down.
Why it matters
A high liquidation preference can mean investors get most of the money in a modest exit, leaving little for founders, so it pays to understand it.
Example
With a 1x preference, an investor who put in £1m gets that £1m back before founders see any proceeds from a sale.
Related terms
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