Preferred Shares
Private Equity glossary · Private Equity Fundamentals
Definition
Equity with preferential rights to dividends and/or liquidation proceeds.
Preferred Shares in plain English
When you own part of a company, you hold 'shares.' Preferred shares are a fancier class of share that gets to go *first* in line — first for dividends (regular profit payouts) and first to get paid back if the company is sold or shut down. It's like buying a concert ticket with priority boarding: if there aren't enough good seats (or enough money) to go around, preferred holders are seated before the ordinary ('common') shareholders. Investors demand this cushion because it lowers their risk if things go badly.
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