Exit Waterfall
The specific breakdown of who gets paid what, and in what order, when a company is acquired or otherwise sold.
Quick Answer
In a $50M acquisition, does preferred stock always get paid before common?
Generally yes, up to its specified preference amount — preferred shareholders are paid their liquidation preference first, and only remaining proceeds are then distributed to common shareholders on a pro-rata basis.
- Preferred is paid its stated preference amount first
- Remaining proceeds flow to common shareholders afterward
- Participating preferred can also share in what's left over
The Lovie Advantage
Lovie simulates exit scenarios at different valuations, showing exactly how proceeds split under your real preference stack.
See how this connects to Employee Stock Purchase Plan (ESPP). For the formal definition, see Investor.gov's glossary entry on bull markets.
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