What is the rational behind converting preferred stock to common stock?
Do acquiring companies only by common stock, they do not by the preferred shares?
If a privately held company has both preferred and common stock holders, and is going to be acquired, does the acquiring company only purchase the common stock? Therefore the preferred holds would convert (if convertible)?
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Answer by Gerald
The chief difference between common stock and preferred is voting rights and liquidation rights. Common stock has voting rights. Preferred stock is paid off in a liquidation before Common.
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