Liquidation Preference Waterfall Calculator
How will M&A exit proceeds be distributed between preferred venture capital investors and common shareholders (founders)?
Financial Inputs
Multiple of capital that preferred investors recover before common stock gets anything.
Defines whether investors share pro-rata in remaining exit proceeds after taking preference.
Maximum total return multiple allowed for preferred shares under capped participation.
Common Equity Payout (Founders)
At an exit valuation of ₹10 Cr with 1x non-participating preference, preferred investors receive ₹3,00,00,000 (1x MOIC, 30% of exit).
Preferred Investor Payout
3,00,00,000
Preferred Multiple on Invested Capital (MOIC)
1x
Key Financial Takeaways
- At an exit valuation of ₹10 Cr with 1x non-participating preference, preferred investors receive ₹3,00,00,000 (1x MOIC, 30% of exit).
- Common shareholders (founders and employee option pool) receive residual proceeds of ₹7,00,00,000 (70% of exit).
- Active waterfall mechanism: 1x Senior Preference Claim Retained.
Frequently Asked Questions
What is the difference between Non-Participating and Participating Preferred Stock?
In Non-Participating preferred (the founder-friendly market standard), investors must choose between taking their 1x money-back preference OR converting to common stock and taking their percentage of the company. In Participating preferred ("double-dipping"), the investor gets their 1x money back FIRST, AND ALSO takes their equity percentage of everything left over.
Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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