Seeking a Liquidation Waterfall Model for VC-Backed Companies
The original query asks whether anyone possesses a liquidation waterfall model for a VC-backed company and is willing to share it. This rewrite reframes the request into a professional call for templates, while preserving the original intent and all factual details.
In the course of financial modeling for venture capital–backed enterprises, one frequently encounters the need for a robust liquidation waterfall structure. This model is essential for determining the order and magnitude of distributions to preferred and common shareholders upon a liquidity event, such as an acquisition or a dissolution.
The question posed in the original inquiry is straightforward: Does anyone have a liquidation waterfall model for a VC-backed company they are willing to share? The request implies a practical need for a working template—one that incorporates typical terms such as liquidation preferences, participation caps, and conversion rights—rather than a theoretical discussion.
For practitioners, a reliable waterfall model should include the following components:
- Capital structure inputs: Series A, B, C (or later) preferred stock, common stock, and any convertible notes or warrants.
- Liquidation preference per series: Typically 1x non-participating, but sometimes 1x participating with a cap (e.g., 2x or 3x).
- Distribution logic: Sequential allocation to preferred holders first, then common, with adjustments for participation and caps.
- Scenario analysis: Sensitivity to exit values, including down rounds, flat rounds, and upside exits.
Given the sensitivity of such models—often containing proprietary assumptions—sharing is usually done under confidentiality or with anonymized data. However, the request remains open: if you have a model that you are willing to share, please respond directly to the original poster.
It is important to note that the original post did not specify a particular jurisdiction, fund size, or industry, so the model should be adaptable to standard U.S. venture capital terms, which are commonly used as a baseline.
Should you have a template that you have used in practice, consider sharing it with a brief explanation of its assumptions and limitations. This would greatly assist colleagues who are building similar models from scratch.