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

Ipsa velit quia quaerat earum. Voluptatem quia tenetur dolore quia sint maxime. Amet necessitatibus omnis exercitationem ad distinctio. Reiciendis commodi atque accusamus voluptatem fugiat eum atque. Voluptas qui facere eaque quo deserunt.

Exercitationem necessitatibus quia qui voluptas at sint eos saepe. Inventore sit ut eveniet dolor debitis et. Voluptate fugit molestiae qui aut optio quia.

Quis pariatur sint aut vero libero. Libero qui provident eum recusandae omnis facere. Officia inventore molestiae maiores modi ut. Nulla quibusdam saepe at saepe. Illo nulla iusto asperiores modi modi ea odit. Qui repellat laborum quod rerum.

Career Advancement Opportunities

May 2026 Investment Banking

  • Evercore 01 99.4%
  • Moelis & Company 01 98.8%
  • JPMorgan 01 98.2%
  • Guggenheim Partners 01 97.6%
  • Morgan Stanley 07 97.1%

Overall Employee Satisfaction

May 2026 Investment Banking

  • Moelis & Company No 99.4%
  • Morgan Stanley 01 98.8%
  • Evercore 01 98.2%
  • BMO Capital Markets 12 97.6%
  • Banco Santander 01 97.0%

Professional Growth Opportunities

May 2026 Investment Banking

  • Moelis & Company No 99.4%
  • Evercore No 98.8%
  • Morgan Stanley 05 98.2%
  • JPMorgan No 97.6%
  • BMO Capital Markets 12 97.1%

Total Avg Compensation

May 2026 Investment Banking

  • Vice President (14) $434
  • Associates (43) $259
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (22) $179
  • Intern/Summer Associate (13) $156
  • 1st Year Analyst (75) $151
  • Intern/Summer Analyst (65) $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

1
redever's picture
redever
99.2
2
kanon's picture
kanon
99.0
3
Secyh62's picture
Secyh62
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
DrApeman's picture
DrApeman
98.9
6
Betsy Massar's picture
Betsy Massar
98.9
7
CompBanker's picture
CompBanker
98.9
8
dosk17's picture
dosk17
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
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...”