Participating Preferred Payout

Model one uncapped participating preferred class with preference then residual participation.

Description

Participating preferred stock can receive a preference and then share in remaining proceeds.

Participating preferred stock can receive a preference and then share in remaining proceeds. One uncapped class yields a simple two-step waterfall.

Model one uncapped participating preferred class with preference then residual participation.

When to use Participating Preferred Payout

Use this for the following task: Model one uncapped participating preferred class with preference then residual participation.

Prepare the scenario values in one currency and consistent time periods. Use fractions for fraction fields and percentage points for percent fields.

How to use Participating Preferred Payout and understand its results

Prepare the scenario values in one currency and consistent time periods. Use fractions for fraction fields and percentage points for percent fields.
Enter exitProceeds, investedCapital, preferenceMultiple, ownershipFraction using the field table, then run the tool.
Read preferencePayout, participationPayout, preferredTotal, commonPayout. Interpret flags, units, ordering and placeholder values using the rules below.
Review any reported issue or failed check, correct the supplied values when appropriate, and verify the result in its intended context.

Input field	Meaning	Value type and bounds	Requirement
exitProceeds	Exit proceeds	number	Required
investedCapital	Invested capital	number	Required
preferenceMultiple	Preference multiple	number	Required
ownershipFraction	Ownership fraction	number	Required

Use nonnegative exit/capital, positive multiple and ownership in [0,1]. Allocate the capped preference first, then participation, and give the remainder to common.^[1]

preference=min(exit,capital×multiple); participation=(exit−preference)ownership

This summarizes the declared operation. Units, indexing, inclusivity and exceptional cases are explained in the surrounding text.

Output field	Meaning	Value type
preferencePayout	Preference payout	number
participationPayout	Participation payout	number
preferredTotal	Preferred total	number
commonPayout	Common payout	number

json

{
  "input": {
    "exitProceeds": 1000,
    "investedCapital": 200,
    "preferenceMultiple": 1,
    "ownershipFraction": 0.2
  },
  "output": {
    "preferencePayout": 200,
    "participationPayout": 160,
    "preferredTotal": 360,
    "commonPayout": 640
  }
}

Limitations and assumptions

Multiple classes, seniority, participation caps and conversion elections are excluded.

These outputs describe the supplied scenario; accounting definitions, capitalization terms and time periods must match the intended use. Malformed requests produce input errors. A successfully evaluated request can still contain false flags, empty result lists or a result outside the supplied threshold; those outcomes have the meanings stated above.

Alternative or Complementary methods

Choose Nonparticipating Preferred Payout for this operation: Model one nonparticipating preferred class choosing liquidation preference or conversion. For a complementary task, use Anti Dilution Comparison for this operation: Compare full-ratchet and broad-based weighted-average down-round conversion prices.

The implementation reference documents the exact calculation, supported input shapes and returned fields.

References

Participating Preferred Payout — tool.io

Similar or alternative tools

Nonparticipating Preferred Payout
Model one nonparticipating preferred class choosing liquidation preference or conversion.
Anti Dilution Comparison
Compare full-ratchet and broad-based weighted-average down-round conversion prices.