1. What is waterfall analysis?

Waterfall analysis is a financial modeling technique used to distribute proceeds among different stakeholders in a structured manner upon exit of the company.

2. How does a waterfall analysis work?

It typically involves creating a series of distribution “waterfalls” based on the company’s cap table that outlines the order and priority in which proceeds are distributed among investors or stakeholders upon exit of the company. 

3. What are the benefits of conducting a waterfall analysis?

  • Provides clarity and transparency in the distribution of proceeds.
  • Ensures that stakeholders receive their entitlements according to predefined priorities.
  • Helps in assessing the potential outcomes under different exit scenarios.
  • Facilitates effective decision-making and negotiation among parties involved.

4. Why is waterfall analysis important?

Waterfall analysis ensures transparency, fairness, and compliance with legal and contractual obligations in distributing proceeds among stakeholders, especially upon the exit of the company and other complex financial scenarios.

5. Can the “liquidation preference” be adjusted in Eqvista’s waterfall analysis?

Yes, the liquidity preference can be adjusted directly in the preferred class settings. The waterfall modeling is quite advanced and automatically calculates the seniority, liquidation multiples, participation rights, and dividends (both cash and share dividends).

6. Is there a way to add a SAFE note for the scenario in the waterfall analysis?

YesSAFE can be added to the waterfall analysis. However, users must issue the SAFE first, as the system does not permit adding a hypothetical SAFE note for testing purposes.

7. Can trustees be added to hold exercised shares? Would the charge be $2 per trustee as well?

Yes. If they are shareholders, the charge would be $2. It is recommended to try the enterprise plan and make a deal on the number of shareholders. 

8. What does Eqvista’s waterfall analysis report include?

The waterfall analysis report can be downloaded in PDF format. The report includes an analysis of a series of distributions based on the company’s cap table that outlines the order and priority in which proceeds are distributed among investors or stakeholders upon exit of the company.

9. How can Eqvista’s waterfall analysis help businesses?

Eqvista’s waterfall analysis provides advanced tools and expertise to streamline the process of creating, analysing, and optimizing waterfall structures for various exit scenarios. It helps businesses ensure accuracy, transparency, and compliance in profit-sharing arrangements.

10. How can I get started with EQVISTA’s waterfall analysis service?

To get started with a waterfall analysis, you can consult with financial experts or utilize specialized software platforms like Eqvista that offer comprehensive solutions for structuring, modeling, and analysing complex distributions.

You can sign up for an Eqvista and access the waterfall analysis service as part of the platform’s suite of equity management features. For further personalized assistance and guidance, get in touch with us

11. Can waterfall analysis be customized to suit different scenarios?

Yes, waterfall analysis can be customized to accommodate the preferences of different transactions. The waterfall modeling is quite advanced and automatically adjusts the order of distribution incorporating different exit scenarios.

12. Is Eqvista’s waterfall analysis feature easy to use for non-finance professionals?

Yes, Eqvista offers a user-friendly interface that simplifies the process of setting up and running waterfall analyses. Users can input their values using intuitive controls and visualize the results with clear, customizable reports. 

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