liquidation preference

liquidation preference
USA
A right entitling holders of preferred stock to be paid the principal amount (or original issue price), or some multiple, of their investment (typically plus all accrued and unpaid dividends on the preferred stock) before holders of common stock, or other junior stock, receive any money in the event of the liquidation, winding-up, merger, consolidation or change of control of a corporation or the sale of all or substantially all of its assets.
For a discussion of the use of liquidation preferences in a private equity minority investment, see Practice Note, Minority Investments: Overview (www.practicallaw.com/1-422-1158).
See also

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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