Equity Waterfall Calculator
Investors Take
$1,718,160
5.73x their capital, about 41.8% a year
You Take
$281,840
14.1% of all proceeds
Their Priority Tier
$590,798
Capital times the multiple, plus the accrued preferred
Your First Dollar
$590,798
The exit above which any proceeds reach you
| Scenario | Exit Proceeds | Investors | You | Your Share |
|---|---|---|---|---|
| Downside (0.5x) | $1,000,000 | $918,160 | $81,840 | 8.2% |
| Your Exit | $2,000,000 | $1,718,160 | $281,840 | 14.1% |
| Upside (1.5x) | $3,000,000 | $2,518,160 | $481,840 | 16.1% |
The priority tier is fixed, so upside accrues disproportionately to you, and downside falls on you first. That asymmetry is the deal.
When the Company Is a Platform
A roll-up buys a platform and smaller companies beside it, and the exit value is where the waterfall above gets its number. Read the multiple you actually paid before the one you hope to sell at.
- Paid in total
- $6,700,000
- Blended multiple paid
- 3.53x
- Sale at the exit multiple
- $7,600,000
- Equity in, then at the sale
- $2,160,000 to $2,910,000
You pay $6,700,000 for $1,900,000 of combined earnings, a blended 3.53x. A sale at 3.53x creates nothing; each turn of exit multiple above it is worth $1,900,000, and that is the bet, not the arithmetic.
At a 4x exit the gap is worth $900,000, against $150,000 of integration.
With $4,690,000 of debt still owed at the sale, $2,160,000 of equity in comes back as $2,910,000, 1.35x, before any debt is repaid from earnings.
On SBA money, one borrower and its affiliates share a $3,750,000 guaranty limit, which a $5,000,000 first loan uses up at a 75% guarantee, so add-ons after a large platform usually finance outside the 7(a).