Liquidation Waterfall Calculator
Enter your share classes and an exit value. The calculator pays liquidation preferences by seniority, distributes the rest pro rata (as-converted), applies participation caps, and decides for each non-participating (or capped) preferred class whether it is better off converting to common.
| Class | Type | Shares | Invested ($) | Pref × | Participating | Cap (× invested) | Seniority |
|---|
Shorthands: 1.5M, 250k. Seniority 1 = paid first; equal numbers are pari passu. Cap blank = uncapped. Conversion is assumed 1:1.
Payout vs exit value
How the waterfall is calculated
- Preference stack. Each preferred class that does not convert is owed preference multiple × amount invested. Classes are paid from the most senior (seniority 1) down. Classes with the same seniority share pro rata to their preference amounts if there isn't enough money (pari passu).
- Residual. Whatever is left is split pro rata by shares among common, converted preferred, and participating preferred (as-converted, 1:1).
- Participation cap. A capped participating class stops receiving once its total (preference + participation) reaches cap × invested; the excess is re-split among the others.
- Convert or take the preference. A non-participating (or capped) holder converts if that gives a strictly larger payout. With several series this is solved by repeated best response until no class wants to switch.
What is a liquidation preference?
A right of preferred shareholders to get their money back (or a multiple of it) before common shareholders receive anything in a sale or liquidation. A "1x non-participating" preference, the most common founder-friendly term, means the investor gets the greater of their money back or their pro rata share as if converted.
Participating vs non-participating preferred
Participating preferred gets its preference and then shares in the remainder ("double dip"). Non-participating must choose one: the preference or conversion to common. A participation cap (e.g. 3x) limits the double dip; above a certain exit value the holder converts instead.
What does seniority mean?
Senior classes (often the latest round) are paid their preference in full before junior classes receive anything. "Pari passu" means classes rank equally and share any shortfall proportionally.
At what exit value does a non-participating investor convert?
In the simple case of one series, when its pro rata share of the exit exceeds its preference: exit > preference ÷ ownership. Example: $10M at 1x for 20% → converts above $50M.
What is not modelled?
Accrued dividends, anti-dilution adjustments, non-1:1 conversion ratios, management carve-outs, option strike prices and vesting, escrow/earn-outs, transaction fees and taxes. Options are treated as exercised common shares.
Disclaimer: These calculators are simplified educational models, not legal, tax, investment or financial advice. Real outcomes depend on the exact wording of your charter, SAFE, side letters and shareholder agreements (e.g. rounding, dividends, anti-dilution, carve-outs, escrow, fees). Always verify with a qualified lawyer or advisor before relying on any figure. No data you enter leaves your browser.