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Liquidation Preference Calculator: 1x, 2x, Participating & Non-participating

Find out who gets paid what when the company is sold. Add each preferred series with its investment, ownership, preference multiple and participation, choose stacked or pari passu seniority and see the full waterfall at any exit value.

QUICK ANSWERA liquidation preference lets preferred investors take their money back (1x, or a multiple) before common shareholders when the company is sold. Non-participating investors take the higher of their preference or their pro-rata share; participating investors take the preference and then also share in the rest. 1x non-participating is the market standard.

Non-participating payout = max(Preference, Ownership × Exit)
Participating payout = Preference + Ownership × (Exit − all preferences)
Capped participation stops at Cap × Investment

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⚠️ Simplified model; your SHA governs. Not legal advice.

What the Liquidation Preference Calculator does

✅ Multiple preferred series
✅ Non-participating, participating and capped
✅ Stacked or pari passu seniority
✅ Automatic convert-or-take-preference choice
✅ Payouts at five other exit values

How to use the Liquidation Preference Calculator

STEP 1
Enter your numbers
Type the figures you know. Every field starts with a realistic example so you can see how it works.
STEP 2
Read the result instantly
Results, tables and the plain-English explanation update as you type. No submit button, no login.
STEP 3
Test scenarios
Change one assumption at a time (valuation, growth, dilution, exit) to see what really moves the outcome.
STEP 4
Share or save
Copy the summary, send it on WhatsApp or print to PDF for your co-founders, board or investment committee.

When liquidation preferences bite

At large exits, preferences barely matter: non-participating investors convert to common because their share is worth more than their preference. They bite at small and mid-size exits, especially when lots of money has been raised. If ₹100 Cr has been invested with 1x preference and the company sells for ₹120 Cr, common shareholders share only what is left after investors take their ₹100 Cr (or convert).

Stacked seniority pays the latest round first; pari passu pays all series together. Participation (“double dip”) and multiples above 1x shift significant value away from founders and employees.

Worked example

Seed ₹5 Cr for 15% and Series A ₹30 Cr for 25%, both 1x non-participating, at a ₹100 Cr exit: Series A takes its ₹30 Cr preference because 25% of the exit would be only ₹25 Cr; the seed investor then picks the better of its ₹5 Cr preference or its share of what is left, and common shareholders split the remainder.

Frequently asked questions

What does 1x non-participating mean?

The investor gets either their investment back or their ownership share of the proceeds, whichever is higher, but not both.

What is participating preferred?

The investor first takes their preference and then also participates pro-rata in the remaining proceeds alongside common shareholders. A cap (for example 3x) limits the total.

What is the difference between stacked and pari passu?

Stacked: later series are paid in full before earlier ones. Pari passu: all preferred series share the available proceeds in proportion to their preference amounts.

Is this tool free? Do I need to sign up?

Yes. It is completely free, needs no login and has no usage limit. FastFee builds payment collection software; these startup and investor tools are free resources for founders, angels and fund managers.

Is my data private?

Yes. Everything you type stays in your own browser on this device (local storage). Nothing is uploaded to FastFee. Export or print a copy if you need to keep it.

Use it together with

Term Sheet Comparator →Compare two term sheets on effective valuation, dilution, preferences and founder payout at exit.Exit Scenario Simulator →Proceeds, multiple and IRR across exit values with probabilities and 1x preference.

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