Pari Passu
Definition
Pari passu (Latin for “on equal footing”) means securities rank equally: holders share proceeds proportionally with no seniority between them.
How it comes up in fundraising
In liquidation stacks, series of preferred stock are either pari passu (paid together pro rata) or stacked (later rounds paid first).
Frequently asked questions
Why does pari passu matter in an exit?
If preferences are stacked instead of pari passu, later investors drain modest exit proceeds before earlier investors and common holders see anything.
What is the founder-friendly configuration?
All preferred pari passu with 1x non-participating preferences keeps the waterfall simple and aligned.
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