Rare type of preferred stock that, in addition to paying a stated dividend, offers the holder the right to participate with the common stockholder in additional distributions.
Preferred stock which entitles the holder not only... Add a comment
a unit of ownership composed of preferred stock and common stock. The preferred stock entitles the owner to receive a predetermined sum of cash (usually the original investment plus accrued dividends) if the company is sold or has an IPO. The common stock represents additional continued ownership in the company. Participating preferred stock has been characterized as "having your cake and eating it too."
Preferred stock where the dividend can increase above the original, stated dividend. To Top
Preferred stock that is entitled to its stated dividend and also to additional dividends on a specified basis if declared after payment of dividends on common stock.
Participating Preferred gives the holder, on sale or liquidation, the right to receive first an amount equal to the liquidation preference prior to any distribution to common stockholders and then any amount owed on an as-converted basis as a common stockholder.
Preferred stock that provides the holder with a specified dividend plus the right to additional earnings under specified conditions.
Preferred stock with special provisions that allow stockholders to receive extra dividends if the company shows excess profits, thereby participating in profits.
Preferred stock that pays additional dividends when earnings distributions to common shareholders are high.
Preferred stock whose owners may receive (participate in) dividends beyond the stated amount or stated percentage
Participating preferred stock is capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. It is used by private equity investors and venture capital firms but not very often. Holders of participating preferred stock get both their money back (with interest) and the money that is distributable with respect to the percentage of common shares into which their preferred stock can convert.