Assume an investor who invested $100 million holds 15% in your company and has a 2x liquidation preference. If you sell your company for $2 billion how much will this investor get without the liquidat

this is a question asked in quiz, and the answer given is $300 million, please explain.

1 Answer(s)


Company is sold for $2 billion and investor owns 15% without liquidation preference. so investor will get 15% x $2 billion = $300 million.

With Liquidation preference:
Investor invested $100mn
Due to 2x liq.pref, investor will first get $200mn ($100mn x 2)
Remaining amount left is $1.8 billion
Then investor will get 15% of $1.8bn which is $270mn
So total amount investor gets $270mn + $200mn = $470mn