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Angels, Dragons and Vultures: How to Tame Your Investors And Not Lose Your Company by Simon Acland

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AND THEN IT GETS MORE COMPLICATED STILL… WITH A LIQUIDATION PREFERENCE

If you’ve switched off, I can only apologize. I’m being as clear as I know how. There’s a graph toward the end of this chapter which compares how all these different deal structures work at different exit prices; that may help. But now’s the moment to switch back on again, because most investments nowadays are structured with a liquidation preference, and that’s what I’m going to attempt to explain next.

Let’s get back into the Vultures’ nest. Those feathers are still falling out and they’re getting balder and balder, because you’ve just sold the company for $3 million. They’ve got their money back thanks to their premium retrieval, so it’s better than nothing. But you’ve ...

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