About the Startup Exit Payout Calculator
When a startup is acquired, the headline price is not split evenly across shares. Investors holding preferred stock usually get their liquidation preference back first, can choose to convert to common if that pays more, and sometimes participate in the remainder as well. This calculator runs that waterfall for up to three preferred series and shows the price per common share and what your own shares or options are worth.
It is for founders, employees with stock options and early angels who want to know what an exit really means for them — especially in modest exits, where preferences can absorb most or all of the proceeds. Enter the exit price, transaction costs, the common share count (fully diluted, including exercised options), each preferred series, and your shares and exercise price.
The model treats all preferred series as pari passu (equal seniority), assumes non-participating preferred converts whenever converting pays more, and ignores participation caps, debt, carve-outs, escrows and earn-outs. Check your company’s charter for the actual terms.
With the default inputs, the your payout (after exercise cost) is $465,294.12. Change any value above to recalculate instantly.
How to use the startup exit payout calculator
- 1Enter the acquisition price for the equity and the expected transaction costs.
- 2Enter the fully diluted common share count, including options.
- 3For each preferred series, enter the amount invested, shares, preference multiple and whether it participates.
- 4Enter your own shares or options and your exercise price.
- 5Read your payout, the price per common share and the waterfall table.
Formula and method
Deal costs are taken off first. Each preferred series that does not convert is owed its investment times its preference multiple; if proceeds are smaller than the total preference, they are shared pro rata to preference amounts (pari passu) and common gets nothing. Whatever is left is divided equally per share among common, any series that converted, and participating preferred, which keeps its preference and also shares in the rest.
Non-participating preferred chooses whichever is larger: its preference or converting to common. Because one series’ choice changes the price per share for everyone, the calculator tests every combination of conversion decisions and picks the one where no series would be better off switching. Your payout is your shares times the common price minus your exercise cost, and is zero if options are under water.
- Preference multiple
- Multiple of investment returned before common (usually 1×)
- Participating
- Preferred that takes its preference and also shares in the remainder
- Exercise price
- Strike price you pay per option
Worked examples
$60M acquisition with two non-participating series
After 2% costs, $58.8M is available. Series B is better off taking its $15M preference, while Series A converts. The remaining $43.8M is split over 8.5M shares (6M common + 2.5M Series A) at about $5.15 per share, so 100,000 options at a $0.50 strike net about $465,294.
Small exit where preferences take everything
Preferences total $20M but the exit is only $15M, so the series share it pro rata to their preferences ($3.75M and $11.25M) and common shareholders receive nothing.
$100M exit with participating Series B
Series B takes its $15M preference and then participates; Series A converts. The remaining $85M is shared over 10M shares at $8.50, so Series B receives $15M + $12.75M = $27.75M and your options are worth $800,000 after exercise.
Frequently asked questions
What is a liquidation preference?+
It is the right of preferred shareholders to get a set amount — usually 1× their investment — back before common shareholders receive anything in a sale or liquidation. Non-participating preferred chooses the preference or converting to common, whichever pays more.
What is participating preferred?+
Participating preferred receives its liquidation preference and then also shares in the remaining proceeds as if it had converted. It is sometimes called “double dipping” and is less common in founder-friendly markets; some terms cap participation at a multiple such as 3×.
Why is my payout less than my ownership percentage times the exit price?+
Liquidation preferences come off the top, and transaction costs reduce proceeds too. In a modest exit relative to the money raised, preferred holders may receive far more than their ownership share, leaving less for common stock.
What happens to underwater options in an acquisition?+
If the price per common share is below your exercise price, the options have no intrinsic value and are usually cancelled. Some acquirers offer retention bonuses or carve-out plans for employees instead.
Does the calculator handle senior and junior preferred?+
It assumes all series are pari passu, the most common structure in recent venture deals. If later series are senior, they are paid in full before earlier series, which lowers payouts to junior preferred and possibly to common in small exits.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.