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This might not be true in Canada, but in the States when investors buy preferred shares with a liquidation preference (even 1x non-participating) the common share valuation can still be quite low, even possibly still PAR. It's called a 'thin common' valuation strategy.

The general idea is, what is the value an investor would have paid without any of the additional rights granted by the preferred shares? Usually for early stage startups the answer is reasonably close to "$0" -- the deal would never happen without the preference. The common shares are often still worthless, in reality and for tax purposes as well, after a Series AA and sometimes even after Series A.




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