Preferred Stock — Not So Preferred After All

Law360, New York ( August 18, 2011, 12:49 PM EDT) -- Preferred stock is the security of choice for private equity and venture capital investors. Preferred stock, which is often convertible into common stock, provides certain rights to its holders, including, most often, the right to receive sale proceeds and dividends in preference to common stockholders and the right to consent to certain actions by the company that could be detrimental to its intrinsic worth. PE and venture capital investors require these special rights to help encourage them to invest in illiquid and highly speculative ventures that may take several years to pan out....

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