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Liquidation Preference Overhang
The amount by which the liquidation preference of venture capital firms and other investors in a company exceeds the estimated value of the company under a possible sale. This means that common stock, stock grants, and stock options held by the company's employees are worthless. For more on this topic, see an article from Morse Barnes-Brown Pendleton about a bonus/carveout plan that companies may develop to continue to motivate and retain employees.
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