Preference Stack
Definition
The total liquidation preference obligations of a company across all preference share series, in the order of priority in which each series is entitled to be paid. The preference stack determines the order and amount of distributions to each investor class before common shareholders participate. The aggregate preference stack must be modeled in the waterfall analysis for every significant exit scenario.
Common Misapplication
The most common misapplication is failing to maintain an updated preference stack model as new funding rounds close. Each new round adds a new layer to the preference stack, and the cumulative effect on common shareholder proceeds at different exit values changes materially with each addition.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.5: The Liquidation and Exit Mechanics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Preference Stack. https://ffistandard.org/glossary/preference-stack/. 2026.