Liquidation

• Term

  Main definition

• Liquidation

  The process of selling off the (remaining) assets of a company, typically followed by (1) the distribution of the sale proceeds, after satisfaction of all debts, priority claims and liabilities, to the company's equity holders, In accordance with their preferences or priorities and on a pro rata basis, and (2) the dissolution of the company. In the context of preferred stock, certain events or transactions (such as a merger, sale or change of control) may constitute a "deemed liquidation" (thereby entitling the holders to receive the liquidation preference applicable to its shares of preferred stock before any payments are made to common or junior preferred stockholders).