Preferred stock is better than common stock, because holders of preferred stock receive preferential treatment in the event of a liquidation of the business. (entrepreneur.com)
This means that with the purchase of stock must come the same economic rights, such as receiving dividends or compensation in the event of liquidation at the same time and in the same amount per share as all other shareholders. (inc.com)
In the event of a liquidation or acquisition, preferred shareholders may receive back at least the original investment value and, often, a multiple thereof before any distributions are made to common shareholders. (microventures.com)