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The Equity Position Methodology

Every figure in the Equity Position Report is produced by the method set out on this page. We publish it in full — the assumptions, the ranges and where they come from — so you can check each number and share the basis with an adviser. Nothing here is a valuation or a quote; it is a transparent planning model built from the figures you enter.

1 · Principles

• Built from your figures. The report models only what you enter — share count, strike, last-known price, fully-diluted shares, residence and so on. Where an input is missing or approximate, the output is too, and the report says which assumption it fell back on.
• Private, in your browser. The calculation runs entirely on your device. Your figures are never uploaded or stored.
• Ranges, not promises. Private-company shares are illiquid and hard to value. We present bands and scenarios, not a single “true” number, and never a forecast.
• One consistent basis. Unless a figure is explicitly labelled “vested”, the report models your full grant (all shares/options, assuming it fully vests and is exercised). Paper value, scenarios, the secondary estimate, the exit waterfall and the tax figures all use this same basis, so they reconcile with one another.

2 · Paper value

Paper value is simply your share count multiplied by the last-known price per share (your most recent funding round or 409A). It is a reference, not a realisable figure: it ignores illiquidity, your share class, and the preference stack. Common shares are typically worth less than the preferred shares investors hold, so paper value usually overstates what you would actually receive today — which is exactly why the sections below exist.

3 · The secondary discount

A private, minority, all-cash secondary — one individual selling a modest stake, with no auction and no guaranteed exit for the buyer — normally clears at a discount to the last headline round price. The discount compensates the buyer for illiquidity and risk, and it is wider for earlier-stage, thinly-traded names and in weaker markets. This is the well-documented discount for lack of marketability.

We translate stage into a planning band:

If you hold preferred shares rather than common, we narrow the band by 15 percentage points (floored at 5–10%), because preferred sits ahead of common and carries less of the risk the discount is pricing.

How to read these. Marketplaces that trade the most liquid pre-IPO names (for example Forge Global) report that private shares move between premiums and discounts to the last round depending on the market, and that the gap widens for less-established names. Our bands are deliberately set for the harder case most readers are in — an individual selling common stock in a less-liquid name without a competitive process — so they sit below the headline marketplace midpoints for the most sought-after companies. They are a starting point for your own judgement, not a market quote; the real discount depends on demand for your specific company, your share class, deal size and how the transfer is structured. Sources: Forge Global private-market insights; the discount-for-lack-of-marketability literature used in private-company valuation.

4 · Value scenarios

The scenarios table applies four illustrative multiples to the price you provided — downside (−50%), conservative (−25%), reference (today) and upside (+100%) — to show how your position scales if the per-share price moves. These are illustrations, not forecasts; real outcomes depend on the company’s performance, your share class and the terms of any future round or exit.

5 · After-tax figures

Where the report shows an “after tax” column or tile, it subtracts tax at the midpoint of your country’s headline rate (section 9) applied to the gain — proceeds less your acquisition cost (the strike, for options). This single blended rate is intended only to show the shape of an after-tax outcome. It deliberately ignores holding-period rules, the many reliefs that can apply (EMI and Business Asset Disposal Relief, QSBS/§1202, Germany’s §19a, Spain’s Startups Law, France’s BSPCE, and others), and your other income — each of which can change the result substantially. Treat the after-tax figure as a prompt for a conversation with a qualified adviser, never as a tax computation.

6 · Dilution

Each new funding round issues new shares, so your percentage ownership falls even though your share count is unchanged. The report illustrates successive rounds each issuing roughly 17% new equity. That sits within the range reported for real rounds: on Carta data, median per-round dilution is around 18% at seed and Series A, roughly 12% at Series B and under 10% from Series C onward — and headline figures understate the true impact once option-pool top-ups and SAFE conversions are included. We use a single mid-range figure for a clear illustration; your actual dilution depends on how much each round raises, at what price, and on pool and anti-dilution terms. Source: Carta, State of Private Markets.

7 · The exit waterfall — liquidation preferences

Investors usually hold preferred shares with a liquidation preference: at an exit they are paid back first, before common shareholders like you. The report models the market-standard 1× non-participating preference — which is overwhelmingly the common structure: in 2025 roughly 90% of UK preference shares were non-participating, and about 96% of those carried a 1× multiple (HSBC Innovation Banking; see also the NVCA model term sheet).

Mechanics: we take the implied company value as last-known price × fully-diluted shares. If you enter total investor capital, we use it as the preference amount; if you don’t, we assume preferred capital of 45% of implied value and say so in the report. At each exit value, preferred takes the greater of its preference or its as-converted share; common splits the rest pro-rata. The result is continuous at the reference value and shows the familiar “squeeze”: at lower exits the preference stack absorbs most of the proceeds, so your take sits well below your headline percentage, and only at larger exits does it behave normally.

Simplifications. This is a single-layer 1× non-participating model. It does not capture stacked or senior preferences across multiple series, participating preferred, multiples above 1×, debt, or carve-outs — each of which can change the outcome materially. The report flags this and lists the terms to verify with your company.

8 · Exercise economics

For options, the cost to exercise is strike × number of options — shown both for your vested, exercisable position today and for the full grant. “Paper spread” is paper value less the cost to exercise the whole grant; break-even per share is the strike. Exercising turns options into shares and can create a tax charge before you have any cash; where you note a post-termination exercise deadline, the report highlights it.

9 · Tax ranges by country

The report attaches a plain-English tax note for your residence and uses a headline rate range to indicate a rough tax band on the reference gain. These are headline ranges to investigate, not your actual liability, which turns on grant type, holding period, residence, other income and reliefs. The ranges reflect each country’s published rates at the time of this version; always confirm against the national tax authority or a qualified adviser.

Primary sources are each country’s tax authority (for example HMRC in the UK) and the equity-plan rules that apply to your grant type.

10 · What this model does not do

• It is not a valuation of your shares, and not an offer or solicitation to buy or sell any security.
• It is not tax, legal or investment advice, and not specific to your circumstances.
• It does not know your company’s actual cap table, preference stack, transfer restrictions or current demand — it models standard structures from the figures you provide.
• It cannot promise a sale is possible: private shares are illiquid, and any sale may be at a materially different price, or not possible at all.

11 · Versioning

This is version 1.2026, first published in 2026. We review the method at least once a year, alongside our annual read of the US and EU private-tech market, and when rates or market norms change materially. Each version carries its year so you always know which basis produced a report. Material changes will be noted here.

• v.1.2026 — first public version: stage-based discount bands, full-grant basis, after-tax scenarios, ~17% per-round dilution illustration, 1× non-participating waterfall, country tax ranges.

Sources

• Forge Global — private-market insights and price data (secondary pricing relative to last round).
• Carta — State of Private Markets (per-round dilution by stage).
• HSBC Innovation Banking — liquidation preferences (prevalence of 1× non-participating terms).
• NVCA — model legal documents (standard term-sheet economics).
• HMRC and each country’s national tax authority (headline rates).

This page describes a general educational planning model. It is not a valuation, and not investment, legal or tax advice. Figures are estimates and ranges, not a promise of value or outcome. PrivateTechShares is an education & tools service — not a broker, dealer, adviser or marketplace. Always confirm the specifics with your company and with qualified professionals before acting.