Here is a step-by-step guide on using Waterfall Analysis on Eqvista.
Once you have logged into your account, click on the “Waterfall Analysis” on the left hand side under “Modeling”.
After you have entered the “Waterfall Analysis”, the following display will appear. The interface was made to be user friendly and compact to allow users to easily input data and understand the results created.
As you will see, the top line has boxes to input the data of your exit scenario. Below this are five displays for the key figures pertaining to this particular exit. And with all the final results after the calculations, this is nicely displayed in a pie graph for each share class, as below:
There is also a table with the results for each share class underneath this. The table is divided by each share class, their total investments in the cap table, and total payout for each.
You can use this data to view the total payout each equity class receives from the exit of the company.
Each value of the waterfall analysis has been custom made to assist with the exit scenarios of the company. Therefore, there are 5 input boxes to enter in data pertaining to your exit value.
The top line with five inputs in the modeling are:
- Exit Value: Exit value of the company
- Exit Date: Date of the company exit. This date may affect any dividends or convertible note interest.
- Uncovered Debt: Uncovered debt of the company not existing in the cap table.
- Transaction Fees: Any transaction fees of the exit. These could be professional fees during the company’s exit.
- Remaining Exit: Remaining value for the shareholders
Below this are four key figures to track in the waterfall analysis process:
- Converted Liabilities: The total converted liabilities value in the company. There is an option to “include” this amount as taken before the other payouts to shareholders. (Note: When you are having waterfall calculations, especially for convertible notes be sure to unclick the “converted liabilities” to $0. This means that you wish to take $0 of the converted liabilities before the common round, when all form of securities are converted to common shares. If you have it as “include”, then only the total principal + interest of the converted notes will be taken.)
- Preference Liquidation: The total payout value of the preference shareholders in the preference round. This would occur if the preference shareholders choose to liquidate their shares before the other shareholders. The order of payout starts at seniority 1 and end with seniority 10.
- Common Participation: The total payout leftover for the common shareholders of the company.
- Common Share Price: The share price per each common share. This value will be 0 if there are no payout to the common shareholders.
For the “Overview” table, it has been split into two main parts.
On the left hand, these columns will resemble closely the company’s cap table. These figures are useful when comparing them to the final payouts from the waterfall analysis.
On the right side of the table are the payouts per each share class. The “Pref Proceeds” represents the proceeds from the liquidation of the preference shares. The “Total Proceeds” shows the total proceeds per share class. And the “Percentage %” shows each percent of the payout of the company.
This table and the waterfall analysis will help you better calculate the exit rounds of your company. This will be especially helpful if you have a complex cap table or many different rounds of investments in your company.