Exit waterfall

Proceeds by class and holder at the offer and across exit values, on conversion prices rebuilt from the charter, with elections solved jointly. Every term cited

Customize this Agent

XLSXDOCX15 steps

The problem

Down rounds were 12.1 percent of Q2 deals. Conversion prices moved, share counts didn't

In Cooley's Q2 report, 96.4 percent of deals carried nonparticipating preferred, so each class takes the better of its preference or conversion, and one class's choice changes what the others get. After a down round, anti dilution lowers the conversion price of every series priced above it. Solve the elections on the cap table's share counts and those series are underpaid wherever they convert, and the breakpoints move

The request

Project Gannet goes to the board next Thursday: a listed strategic's LOI at $285 million enterprise value for our home care agency software company, $41 million ARR, $118 million of preference across five series. Run the exit waterfall by class and holder at the offer and from $150 to $450 million, with every breakpoint. The C-1 down round lowered Series B and C conversion prices: rebuild them from the charter, not the cap table, and solve the elections jointly. Carve out first, escrow and earnout allocated as the charter says, options by strike. Give me our A and B proceeds, multiple and IRR, and whether the drag along clears without us. Workbook and two page memo for Monday's partner meeting.

Gannet Cap Table Sep 2026.xlsx
Gannet Restated Certificate of Incorporation 2025.pdf
Gannet Voting Agreement 2025.pdf
Gannet LOI Sep 2026.pdf
Gannet Management Carve Out Plan.pdf

How Axe works

ApprovedChanges asked

Your reviewApprove, or say what to change

Approved or changes

Exit waterfall and memoWorkbook, memo and tie out report

Final reviewApprove the revised files

Revised exit waterfall and memoRevised files and tie out

Step

Solve the conversion elections

Prompt

Sent to the model at this step

Build the waterfall at the offer and across the exit range in $25 million steps, each enterprise value walked to proceeds available to stockholders on the letter's bridge, with the whole price treated as paid at close, escrow included and earnout left out; the next step times them. Pay the carve out first, on the base the plan defines and net of any offset it applies. Then rank the preferences in the charter's order of seniority, with pari passu classes sharing in proportion to their preference amounts. Each nonparticipating class takes the greater of its preference and its as converted share, on the adjusted conversion ratios. Solve the elections jointly: start with every class taking its preference, convert the class with the lowest preference per as converted share once the value per common share passes it, recompute the pool, and repeat until no class gains by switching. Bring each option grant and warrant in only once the value per common share exceeds its strike, paid the spread: add its exercise price to proceeds and solve that circularity, treating unvested grants as the letter does. Give every breakpoint as an exit value: where each preference is covered, where each class converts and where each strike comes into the money. Show proceeds by class and holder at each value with each election, options and warrants at their spread. Then rerun the offer on the cap table's unadjusted share counts and show what changes, class by class.

Uses

Exit values
Terms
Offer terms
Tied cap table
Conversion prices

Produces

Waterfall

What you get back

XLSXExit waterfallTerms by class, adjusted conversion prices, proceeds by class and holder, breakpoints, timing, returns

DOCXPartner memoOur proceeds at the offer, where each class converts, the drag along vote, sensitivities

Tie out reportEach term, share count and payout marked tied, corrected or open

Make it yours

Point it at another portfolio company or offer, set your own exit range and escrow cases, or use your fund's memo format. Every step and every prompt can be edited

Customize this Agent

Opens a private copy of this Agent in your workspace, ready to adapt to your own sources

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