What is your goal with this structure? I mean, what is the advantage?

the stanford primer discussed some of this - i.e. Doing 50% preferred equity @7% and 50% redeemable preferred equity @ 17% so that you can retire the redeemable piece. Like most everything else, if you can find investors who agree to it, then you can do it.


One advisor I spoke with also mentioned it was a common structure to have a higher initial preferred return - i.e[redacted]% and then distribution flips to[redacted]in entreprenuer favor. This way, your investors continue to get upside. At some point they will want to be bought out and you can make a fair offer.

Would it have to be redeemed at a premium? How soon?

Not necessarily. Typically a liquidation value is negotiated upfront at mutually agreed terms e.g. 2x face. Timing again depends on what you negotiate as long as it conforms to any senior lender requirements.

Happy to discuss flexible cap stack solutions that provide liq pref with a metric based redemption hurdle.

As Jason mentioned, anything is possible if you can find investors willing to do it. It could work with friends & family type investors, but I suspect you will find it difficult to identify search capital investors on this forum who would agree to limit their upside.