When it comes to buying stock on the NYSE and NASDAQ, there is usually one type that is available: common stock. This gives you ownership in the company as well as the right to vote on important matters. A company’s board of directors may also decide to pay out a dividend. However, there are variations of common stock, called equity classes, that investors should also pay attention to.

Equity classes often apply to companies that are in the technology industry, such as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Snap (NYSE:SNAP). But the traditional media industry also has its fair share of equity classes like News Corp (NASDAQ:NWS) and Discovery (NASDAQ:DISCK).

The main reason for this? The management behind each of these companies wants to preserve control. It’s really that simple.

For example, in the case of Google, here’s how the founders described its rationale in its IPO document:

“We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me, and on our innovative approach.

We want Google to become an important and significant institution. That takes time, stability and independence. We bridge the media and technology industries, both of which have experienced considerable consolidation and attempted hostile takeovers.”

So with that base understanding in mind, what are the different equity classes?

The Two Types of Equity Classes

There are usually two different types of equity classes. For example, in the case of FB, CEO Mark Zuckerberg owns 18% of Class B shares, which have 10-votes-per-share. By comparison, the Class A shares have only one-vote-per-share. The upshot is that Zuckerberg has close to 60% of the voting control of the company.

Now in some cases there may even be Class C shares that have zero voting rights. This is the situation with GOOGL. Back in April 2014, the company issued the Class C shares to allow for M&A and the issuance of stock options so as not to dilute the founders’ voting positions.

Finally, a company may want to issue another type of equity: preferred stock. As the name implies, this means that the security has certain advantages versus common stock. Some include getting first dibs on dividend payments as well as higher yields. There will also be a priority if there is liquidation.

For the most part, preferred stocks are for early-stage startups like Airbnb, Uber and Lyft. In such cases, the venture capitalists (VCs) want to make sure they have ways of protecting their investments.

Yet high-profile fund investors may also be able to get preferred shares. This is the case with Warren Buffet. An example is when he invested $5 billion in Bank of America (NYSE:BAC) in 2011 and got preferred shares with a dividend yield of 6%.

Bottom Line on Equity Classes

Many investors think equity classes are inconsequential. After all, if you own a couple hundred shares, does your vote really count?

Perhaps not much.

But when investing in a company that has equity classes, there can still be adverse consequences. Management may use this as a way to entrench itself, which means a buyout could be a remote possibility. This is why activist investors and hedge fund managers are usually not fans of equity classes.

But possibilities like that will probably not be much of a deterrence for founders, especially those in Silicon Valley. In other words, for those investors who want to invest in some of the hot IPOs in the coming years, there will likely be no choice but to accept equity classes.

Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.