Participating preferred

In accounting, participating preferred means preferred that takes its liquidation preferenceEquity & financingLiquidation preferenceA preferred stockholder's right to be paid a stated amount — usually 1× the original issue price plus declared but unpaid dividends — before common stockholders in a sale or liquidation. Non-participating preferred takes the greater of that or its as-converted share; participating preferred takes both and then shares in what is left alongside common as if converted, often up to a cap. Non-participating preferred takes the greater of its preference or its as-converted share, not both.