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Non-participating preferred

Also called: non-participating preference

In one line

Preferred stock that takes either its liquidation preference or its as-converted common share, whichever is greater — but not both.

In plain English

The friendlier version for employees: investors choose the better of getting their money back or converting to common and sharing pro-rata. No double dip.

If you were explaining it to a 5-year-old

The VIP guest must pick one: either their money back, or a normal slice of cake — not both.

Why it matters when you sell

Non-participating preferred leaves more for common holders in a good exit, improving what your shares are ultimately worth.

Related terms

Participating preferredLiquidation preferenceExit waterfallPreferred stock

Put it to use

Exit waterfall calculator

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.