Business Pitch Dictionary by pitch.dog
Term-sheet economics · Working

Participating preferred

Also called: participating preference

ELI5

Investors may get their preference and then share the rest.

Used in conversation

“Participating preferred can create a double-dip outcome.”

Definition

Preferred stock that receives its preference and then also participates in remaining proceeds, subject to the documents.

Here “Participating preferred” means: Preferred stock that receives its preference and then also participates in remaining proceeds, subject to the documents.

Pitch context

You will see “Participating preferred” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches term-sheet economics.

Why it matters: In term-sheet economics, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Sources & evidence · 5

Direct term-level sources and supporting source families.