Exit waterfall

The Exit waterfall page turns your real cap table into a payout for a sale of the company. Enter an exit value and it shows what each holder, class and group would receive.

The inputs#

• Exit value. Type a number (50m and 1.2b work) or use the slider, which runs from $1 million to $2 billion on a logarithmic scale, or a preset ($10M, $50M, $100M, $500M, $1B). It starts at five times your last round's post-money, or $50 million if there is no round.
• Transaction fees, as a percentage of the exit value.
• Debt repaid, an amount paid before any equity.
• Include unvested options. On, every granted option and RSU counts. Off, only what has vested today counts.
• Include SAFEs and notes, which estimates outstanding instruments.

The distributable amount is the exit value minus fees and debt, never below zero.

How the money is paid out#

1. Preferences. Preferred classes are paid by seniority, highest first. A class's claim is its investment times its liquidation multiple. Classes with the same seniority are paid pari passu, in proportion to their claims. If money runs out, lower tiers get less or nothing.
2. The remainder is shared per common-equivalent share by common stock, preferred that converts, and participating preferred. Full participation has no limit. Capped participation stops when preference plus participation reaches the cap multiple times the investment.
3. Conversion decisions. Each preferred class either takes its preference (and any participation) or converts to common at its conversion ratio, whichever pays it more. The model settles on a state where no class does better by switching.
4. Options and warrants pay only when the value of a common share is above their strike, and net of the strike. Those with the same strike are grouped. RSUs count as common shares (all of them, or only the vested ones, depending on the switch). The unissued pool receives nothing.

Class terms come from the Share classes page. A class's invested amount is its shares times its original issue price, or the average price paid when none is set.

SAFEs and notes#

With the switch on, a SAFE or note with a valuation cap is estimated as an extra non-participating 1x class, level with the most senior preferred, holding the shares its cap implies (principal divided by cap, as a share of the company, with the total limited to 95%). Pre-money SAFEs and notes use the same formula as an approximation and carry an Estimate tag. Instruments without a cap are repaid principal plus accrued interest as a 1x preference and never convert.

What you see#

• Distributable, per common share, and what founders and investors receive in total.
• Payoff by exit value, a chart of payout by holder group. It spans from about a thousandth of twice your exit value (at least $100,000) up to twice your exit value, and hovering reads off any point.
• Payout by holder, with payout, share of proceeds, amount invested and multiple.
• How each class is paid: whether it converts, takes its preference, takes preference plus participation or receives nothing; whether options are in the money or underwater; and the common residual.

Saving scenarios#

Save scenario stores the exit value, fees, debt and both switches under a name. Load one from the Saved scenarios menu. Deleting a scenario removes it for everyone on your team and does not affect the cap table.

What the model leaves out#

It uses only the inputs above. It does not model escrows, earn-outs, management carve-outs, taxes or anti-dilution calculations, and it does not apply acceleration terms. Leaving Include unvested options on is the closest it gets to a case where everything accelerates.