Employee Exit Waterfall: what would you actually get?

Owning 1% of a company that sells for €100m does not mean you get €1m. Investors' liquidation preferences get paid first. This tool shows what reaches you, the employee, at different exit values — and why. In ten seconds, no sign-up.

Written & maintained by the PrivateTechShares team · Published September 2026 · Reviewed September 2026

Currency:

Exit / sale value — what the company sells forin millions

Total investor money in — the preference basein millions (all preferred capital raised)

Preference multiple

Preferred type

Participating = investors take their money back and share the rest.

Investors' ownership — % of the company preferred hold%, fully diluted (typical VC-backed: 45–65%)

Your ownership — your fully-diluted %%. Not sure? how to work it out

Your exercise cost — optional, to net it outtotal cash, not millions

Your estimated net proceeds

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The same equity across different exits

Exit value	Preference paid first	Left for common	Your gross	Your net

Notice how your share is squeezed at lower exits and only behaves “normally” once the exit is large enough that investors convert to common.

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Turn this into a real plan

This is the single-layer version. The equity toolkit helps you gather the actual numbers — your shares, share class, the full preference stack and transfer rules — and prepare properly, step by step.

See the equity toolkit →

Want it modelled end to end on your own grant? The Personalized Equity Report does exactly that. Weighing whether to exercise first? Try the exercise & AMT calculator.

Why your percentage gets squeezed

Investors almost always hold preferred shares with a liquidation preference: in a sale, they're paid back first — commonly 1× the money they put in, sometimes a multiple — before common shareholders (founders and employees) receive anything. So at a sale price near or below the total invested, common can receive little or nothing, and your headline percentage is misleading. Only once the exit is big enough that investors do better by converting to common than by taking their preference does your percentage start to behave the way you'd expect.

Participating preferred makes it worse for you: those investors take their preference and then share the remainder pro-rata — a “double dip.” Multiple preferences (2×, 3×) raise the bar the exit has to clear before common sees meaningful money. Real deals also stack several investor series with different seniority, sometimes with caps, plus any debt ahead of equity and management carve-outs — all of which this simplified tool leaves out.

Methodology & limitations. This tool models a single block of preferred with one preference multiple, and treats all non-preferred shares as common sharing pro-rata. Non-participating preferred are assumed to take the greater of their preference or their as-converted value; participating preferred take the preference then share the remainder. It ignores multiple series and seniority, preference caps, convertible notes/SAFEs, debt, option-pool nuances, carve-outs and all tax. Figures are illustrative estimates, not financial, tax or legal advice.

Questions people ask

Why isn't my 1% of the company worth 1% of the sale price?

Because investors usually hold preferred shares with a liquidation preference — they get their money back (often 1x, sometimes more) before common shareholders like you see anything. In a modest exit the preference stack can absorb most of the proceeds, so your 1% of common can be worth far less than 1% of the headline price. In a large exit, preferred typically convert to common and your percentage behaves normally.

What is participating vs non-participating preferred?

Non-participating preferred take the greater of their preference or their as-converted share — not both. Participating preferred take their preference first and then also share the remainder alongside common ("double dip"), which leaves less for employees. Participating terms are worse for common holders.

Is this calculator financial advice?

No. It's a simplified educational model. Real cap tables have multiple preference series with different seniority, caps, debt ahead of equity, option-pool and management carve-outs, and country-specific tax — none of which this single-layer model captures. Use it to understand the mechanics, then confirm your actual numbers with the company and a professional.