Preferred equity vs. commmon equity

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by a searcher from New York University
in New York, NY, USA

1yr ago

Preferred equity vs. commmon equity

Would it be better to offer more preferred equity or more common equity?

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reply by a professional 1yr ago
from University of Virginia in Holmes, NY 12531, USA

Thanks, Luke. Agree with the good analysis from ^redacted‌ above. This is going to depend on (a) the status of the current cap table, (b) who you’re hoping to grant the shares, (c) the purpose of issuing new shares, (d) what the company’s governing docs permit, (e) the particular characteristics of the contemplated preferred and the particulars of any currently issued preferred, among many others. Please feel to drop me a note redacted if I can be helpful. All the best.

reply by an investor 1yr ago
from Wright State University in Bellefontaine, OH 43311, USA

What are you trying to achieve? There is no general "better" answer. There is only the answer that aligns with your goals and the best makeup for your deal. For this discussion to really be meaningful we would need an outline of what you are trying to achieve.

What are the terms of the preferred equity?
Are you trying to minimize dilution by ensuring a class of equity gets paid back first or gets a higher return?
etc etc
^redacted‌ had some great thoughts above. ‌