Liquidation Preference
Also called Liq Pref and 1x Liquidation Preference
The rule for who gets paid first, and how much, when a company is sold or wound down. A 1x preference means preferred investors get their money back before common holders see anything.
Why it matters
Liquidation preferences decide how the money is split in an exit, and high or stacked multiples can leave founders with far less than the headline price suggests. It is often the most important term after valuation.
For example
With a 1x preference, investors who put in 50 crore take that back first in a 60 crore sale, leaving only 10 crore for the common shareholders.
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