waterfall-analysis

Waterfall Analysis

Scope

Use when the user asks how exit proceeds would be distributed in a sale, merger, IPO, liquidation, or other liquidity event. For current cap-table ownership without an exit scenario, use cap-table-analysis. For round history and total raised, use funding-rounds-analysis.

Waterfall analysis is term-sensitive; do not present exact legal allocation unless share-class terms and seniority are available from Slice data or supplied by the user.

Input Workflow

1. Ask for exit proceeds if the user did not provide an amount.
2. Use cap_table_get_summary and ownership_get_company_breakdown for company-level share counts.
3. Use share_classes_list and share_classes_get_one to inspect share-class rights, liquidation preference, participation, conversion ratios, and seniority where available.
4. Use rounds_list and rounds_get_total_raised to understand invested capital by round/share class.
5. Use cap_table_search_entries and securities tools to identify stakeholder holdings by share class.
6. Include options/warrants only according to the scenario: exercised-only, fully diluted, treasury-stock method, or as instructed by the user.

Waterfall Mechanics

Typical seniority is most recent preferred first, then earlier preferred, then ordinary/common, unless governing documents specify pari passu or another order. Non-participating preferred receives the greater of its liquidation preference or as-converted participation. Participating preferred receives preference first and then participates in residual proceeds, sometimes subject to a cap.

At low exit values, junior classes may receive nothing after senior preferences. At high values, preferred classes may convert if as-converted proceeds exceed the preference.

Output

Show assumptions and calculation mode first. Then summarize by share class and stakeholder where data supports it: invested capital, preference multiple, preference amount, residual/as-converted proceeds, total proceeds, and percentage of total. Include breakeven or conversion-threshold notes when useful.