Startup Terms Glossary
What is Liquidation Preference?
A liquidation preference is a contract that determines in what order shareholders would be paid in the event of a liquidation. In most cases, investors and preferred stockholders receive priority, but liquidation preferences can vary. Liquidation preferences are most often used in venture capital contracts, hybrid debt instruments, promissory notes and other structured private capital transactions.
Liquidation Preference Examples
Examples of the points involved in liquidation preference:
- Point 1. Helps ensure that investors are paid back first in the event of a liquidation
- Point 2: Investors typically get the exact amount of funds back that have been invested, but there are scenarios where the investors wind up getting back a higher amount
- Point 3: Within liquidation preference, a stockholder can elect for full participation, non-participating, and capped participation
Here’s another web page about liquidation preference.
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Meet some of our Liquidation Preference Lawyers
Joe S.
I am a Connecticut-licensed attorney and transaction advisor with extensive experience in middle-market mergers and acquisitions, corporate finance, and complex deal structuring. As the principal of Amirext LLC, I serve as lead counsel and strategic advisor to founders, boards, and investors, often working at the intersection of legal, financial, and operational decision-making.
"Joe was responsive, communicative and a real advocate for me. He was thorough with the work, and managed expectations very clearly. I would 100% hire Joe again, and may do so very soon."
Harry N.
Experienced business advisor and in-house counsel with extensive litigation experience, representing parties in a variety of complex commercial disputes, including securities, financial fraud, contract, and antitrust litigation.
"Harry was super thorough and thoughtful in reviewing my contract drafts. A pleasure to work with. Highly recommend!"
Heather B.
Heather B.
Delivering proactive and strategic guidance to health and fitness professionals and entities as they scale.
"Quick turnaround, had everything I needed and a bit more. Could've used a bit more communication in the beginning to know my circumstance to help draft things I may not be thinking of or missed but all in all it was a great contract for the price."
November 22, 2025
Corey P.
I represent developers, investors, homebuilders, and hospitality brands in complex real estate transactions spanning the full life cycle of asset ownership—from acquisition and financing to development, leasing, management, and disposition—across a wide range of asset classes, including vacant land, residential communities, hospitality, multifamily, office, and mixed-use projects. Clients rely on me for practical guidance and efficient deal management. Beyond transactional work, I assist hospitality brands and real estate brokerages with regulatory compliance, advising on timeshare, condominium, community association, and brokerage licensing laws. My approach is rooted in understanding each client’s business and strategic goals. I help move deals forward by anticipating risks, identifying solutions, and serving as a collaborative partner as clients build, expand, and manage their real estate portfolios. My aim is to serve not just as outside counsel, but as a trusted advisor who supports clients in executing their vision and strengthening the long-term value of their assets.
November 26, 2025
Shannine A.
We offer comprehensive and practical solutions to individuals, businesses, and families throughout the State of Florida. Whether you are facing a litigation case or require assistance with transactional law, our skilled team is dedicated to assisting you through the process.
Don M.
AI and crypto-savvy Attorney with 20+ years’ experience advising companies in I.T., software, telecommunications, FinTech and Artificial Intelligence (AI) with 9+ yrs spent in GC roles. Barred in 3 states (Calif. New York & Wash. D.C.) plus the U.S. Supreme Court. Registered Patent Attorney (USPTO). Extremely versatile, with subject matter expertise in a variety of legal topics highly useful for tech and startup companies, including IP, privacy, financial / banking laws (Regulation E, UDAAP, ID Theft Red Flags Rule, etc.), AML, KYC, export controls, litigation/ADR, cryptocurrency regulations and the rules governing the use of A.I. Deep understanding of computer technology via Master’s in Comp. Info. Systems (MSCIS). Also pre-law business experience. Certifications: Certified Anti-Money Laundering Specialist (CAMS); Certified Information Privacy Professional (CIPP-US); Certified HIPAA Professional. Education: Law degree (JD): UCLA, 2003. MSCIS: Boston Univ., 2011.
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