Comparing participating preferred valuations to normal valuations

Hey, I was wondering if someone could help me figure out the math behind participating preferred vs. vanilla structures

Structures like participating preferreds have advantageous return profile properties versus a regular preferred investment given it allows the investor to double dip on proceeds. Therefore, the enterprise value of the two offers (one being a participating preferred and the other being non-participating) are not comparable. The participating preferred structure allows the investor to offer a higher enterprise value, but it may not necessarily be the better offer to the seller due to the properties of the security. In other words, the EVs are obviously not "apples to apples". 

This much makes sense to me. The question I have is, how do we compare the EVs on an "apples to apples" basis? Just curious if anyone here knows the math or conceptually how to think about this.

Let's say there are two investment offers, both $200M and one is a regular pref and one is a participating pref. The non-participating pref values the company at $1.1bn. The regular pref values the company at $1.0bn. How do we figure out which is the better offer if we are the seller? In other words, how do we figure what the $1.1bn participating pref value is equal to in a normal structure? Is it equal to $0.9bn, $1.0bn, $1.05bn, etc. 

Was talking to people about comparing these structures and intuitively and directionally know that the participating pref allows a buyer to offer a higher EV, but I just don't know the math to figure out how to actually compare it. Maybe some people in PE or IB know. 

1 Comments
 
Most Helpful

Vel sit deserunt eos dolorum laborum quo. Placeat reiciendis cum ratione hic debitis labore. Eos possimus optio omnis nobis.

Voluptas non molestiae voluptatem harum rem est. Iusto itaque est omnis provident nesciunt aperiam. Alias debitis sequi repellat perferendis harum.

Alias enim debitis et veritatis saepe quasi. Dolores in voluptate voluptates. Quae provident aut tenetur exercitationem molestiae id. Minus vel omnis maxime aut dolorum quia in. Temporibus excepturi et quae impedit odio.

Rerum expedita sint non laboriosam id iusto et. Quam aliquid delectus adipisci ipsa voluptatibus deserunt. Perspiciatis et cum quisquam nulla.

Career Advancement Opportunities

September 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 98.9%
  • JPMorgan 01 98.4%
  • Goldman Sachs 01 97.8%
  • Morgan Stanley 07 97.3%

Overall Employee Satisfaction

September 2026 Investment Banking

  • Moelis & Company No 99.5%
  • Morgan Stanley 02 98.9%
  • Evercore 01 98.4%
  • Banco Santander 02 97.8%
  • BMO Capital Markets 12 97.3%

Professional Growth Opportunities

September 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 98.9%
  • Morgan Stanley 07 98.4%
  • Goldman Sachs 01 97.8%
  • JPMorgan No 97.3%

Total Avg Compensation

September 2026 Investment Banking

  • Vice President (16) $429
  • Associates (51) $260
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (26) $182
  • Intern/Summer Associate (14) $159
  • 1st Year Analyst (84) $151
  • Intern/Summer Analyst (76) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”