Calculator
Exit waterfall calculator
Enter the preferred classes and an exit value to see the payout to each class and to common, including which classes would convert.
When a venture-backed company is sold, the proceeds are not simply split by ownership. Each series of preferred stock first decides whether to take its liquidation preference or convert to common, according to its terms and seniority, and common holders (founders and employees) get what is left. This calculator works that out for any exit value and draws the payout to each holder across a range of sale prices. It runs in your browser; nothing is sent anywhere.
| Holder | Ownership | Takes | Payout |
|---|---|---|---|
| Seed preferred | 16.0% | converts to common | $4,000,000 |
| Series A preferred | 20.0% | preference | $10,000,000 |
| Common | 64.0% | residual | $16,000,000 |
Turn on JavaScript to change the structure and see the payout curve.
The default example at three sale prices
A company has 8,000,000 common shares (founders and employees), a seed series that invested $3 million for 2,000,000 shares and a Series A that invested $10 million for 2,500,000 shares. Both are 1x non-participating and rank equally (pari passu). Total preferences are $13 million.
| Sale price | Seed | Series A | Common |
|---|---|---|---|
| $12 million | $2.77 million | $9.23 million | $0 |
| $30 million | $4 millionconverts | $10 million | $16 million |
| $100 million | $16 millionconverts | $20 millionconverts | $64 million |
- At $12 million, less than the total preferences, both series take their preference, sharing pro rata to the amounts invested, and common receives nothing.
- At $30 million, the seed's 16.0% stake as common is worth more than its $3 million preference, so it converts; the Series A's 20.0% would be worth less than $10 million, so it takes the preference. Common gets the rest.
- At $100 million, everyone converts and proceeds follow ownership.
How the calculation works
- Each series that is not converting is owed its preference: amount invested × multiple.
- Preferences are paid from the highest seniority down; series of equal seniority share what is available in proportion to their preferences.
- What is left is shared, per share, among common, converted preferred and participating preferred. A participating series with a cap stops at its cap (preference plus participation, as a multiple of investment) and the excess goes to the others.
- Each non-participating or capped series converts if converting pays it more, given the others' choices; the calculation repeats until no series wants to switch.
The engine reproduces published law-firm examples of participating, non-participating and capped preferences (validation). Background: liquidation preference.
What it leaves out
- Option exercise prices (options are treated as exercised for free), unvested options that an acquirer cancels, and taxes.
- Debt, transaction fees, escrows, earn-outs and management carve-outs: enter proceeds after these.
- Cumulative dividends and conversion ratios other than 1:1 (enter adjusted share counts if anti-dilution has applied).
- SAFEs that have not converted: in a sale before a priced round, each takes the greater of its money back or its as-converted amount, which is close to a 1x non-participating series.
Sources
- Model Legal Documents (term sheet, certificate of incorporation, investors' rights, voting and ROFR/co-sale agreements), National Venture Capital Association. Cited for structure; not reproduced.