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Participating Convertible Preferred Share (PCP)

Participating Convertible Preferred Share (PCP)

What is 'Participating Convertible Preferred Share - PCP'

An equity holding that gives investors the right to claim excess earnings (along with common-stock shareholders) in addition to the preferred dividend. PCPs are commonly used in venture-capital financing; venture capitalists will often exercise the option to convert their PCPs to common stock when they intend to exit an investment. The type of exit – initial public offering or trade sale – determines the security's cash flow right.

Explaining 'Participating Convertible Preferred Share - PCP'

The National Venture Capital Association is the industry lobbying and advocacy organization for venture capitalists. According to a 2009 Global Insight research study, companies with venture-capital backers accounted for 12.1 million jobs and $2.9 trillion in revenue in the U.S. in 2006 alone.


Further Reading

Participating convertible preferred stock in venture capital exitsParticipating convertible preferred stock in venture capital exits
www.sciencedirect.com [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …

Venture capital and the finance of innovationVenture capital and the finance of innovation
papers.ssrn.com [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …

Essays in corporate finance.Essays in corporate finance.
etheses.lse.ac.uk [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …

The Modigliani-Miller propositions after thirty yearsThe Modigliani-Miller propositions after thirty years
www.aeaweb.org [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …

The Role of Contracts in Venture Capital ReturnsThe Role of Contracts in Venture Capital Returns
papers.ssrn.com [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …

Venture capital and other private equity: a surveyVenture capital and other private equity: a survey
onlinelibrary.wiley.com [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …

Venture capitalists versus angels: the dynamics of private firm financing contractsVenture capitalists versus angels: the dynamics of private firm financing contracts
papers.ssrn.com [PDF]
… preference in dividend payments and at the same time allows them to participate in excess … Participation rights entitle the VC, in the event of sale or liquidation, to a liquidation … Thus, upon sale or liquidation, participating preferred shareholders have a debt-like claim equal to …


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