Participating Convertible Preferred Share - PCP


DEFINITION of '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.

BREAKING DOWN '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.

  1. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  2. Venture Capital Funds

    An investment fund that manages money from investors seeking ...
  3. Angel Investor

    An investor who provides financial backing for small startups ...
  4. Participating Preferred Stock

    A type of preferred stock that gives the holder the right to ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Common Stock

    A security that represents ownership in a corporation. Holders ...
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