A liquidation event is the trigger defined in preferred stock terms that activates the liquidation preferences and waterfall mechanics. Typical triggers include sale of the company (acquisition or merger where existing stockholders own less than majority of surviving entity), sale of substantially all assets, dissolution or winding up of the company, and sometimes other defined events like change of control transactions. The specific definition matters because what counts as a "liquidation event" determines when preferred stockholders get paid and common stockholders only get what remains. It is the mechanism that activates preferred preferences; understanding what triggers it is foundational.
The standard liquidation even...