Preferred Return
Content
Definition
A Preferred Return is a profit distribution mechanism whereby preferred investors receive returns on their investment before any other class of shareholders.
Usage and Context
Preferred return ensures certain investors receive returns before others.
Frequently asked questions
- What is a preferred return? A preferred return is a distribution mechanism where preferred investors receive returns on their investment before other shareholders.
- What is the difference between pari passu and preferred return? Pari passu treats all investors equally; preferred return gives certain investors priority in profit distribution.
- What is the difference between target IRR and preferred return? Target IRR is the desired internal rate of return on an investment, while preferred return is the guaranteed minimum return for certain investors.
Benefits
Preferred return ensures certain investors receive returns before others, providing an added layer of security.
Conclusion
Preferred Return ensures certain investors receive returns before others.
