📊

Liqpref Waterfall

A Python library for modeling startup liquidation preferences. Know your payout before the lawyers do.

Python ★ 1 MIT License

💡 What Is This?

When a startup gets acquired or liquidated, who gets paid what is not as simple as "divide by shares." Investors negotiate liquidation preferences — contractual rights that determine payout order and amounts before common shareholders see a dime.

This library models the full complexity: stacked preferences across funding rounds, participating vs. non-participating preferred shares, participation caps, options & warrants with exercise prices, and Nash equilibrium conversion decisions where each share class strategically decides whether to convert to common.

Feed it a CSV cap table, give it exit values, get back the exact distribution. Use it as a library, or run it from the CLI. No spreadsheet gymnastics required.

⚙️ How The Waterfall Works

1️⃣ Pay Preferences First

Liquidation preferences are paid in priority order — highest stack order first. Series E before Series D before Series C. If there isn't enough, pro-rate within the priority group.

2️⃣ Distribute Remainder

After preferences are satisfied, remaining proceeds go to participating preferred (who double-dip) and common shareholders on a pro-rata basis.

3️⃣ Apply Caps

Participating preferred with caps (e.g., 2x) get cut off when their total payout hits the cap. Excess is redistributed to uncapped participants.

4️⃣ Conversion Decisions

Non-participating preferred must choose: take the preference, or convert to common for a larger pro-rata share. The Nash equilibrium algorithm finds the optimal strategy considering all classes simultaneously.

✨ Features

📚 Stacked Preferences

Model multiple funding rounds with priority-based payouts. Series E → D → C → B → A → Common.

🔄 Participation Rights

Participating, non-participating, and capped participation. The full spectrum of VC terms.

🎯 Nash Equilibrium

Advanced conversion algorithm considering strategic interactions between all share classes simultaneously.

📋 Options & Warrants

Full support for employee options and investor warrants with exercise prices. Exercise-when-profitable logic built in.

📊 CSV Cap Tables

Parse cap tables from flexible CSV format. No manual data entry needed.

🔢 Multiple Algorithms

Nash, heuristic, individual, and collective conversion strategies. Compare outcomes across approaches.

🚀 Usage

CLI — Quick Analysis

# Analyze a cap table at multiple exit values
python cli.py captable.csv --exit-values 15M 25M 50M 100M

# Detailed step-by-step breakdown
python cli.py captable.csv --exit-values 50M --detailed

# Compare conversion algorithms
python cli.py captable.csv --conversion-algorithm nash
python cli.py captable.csv --conversion-algorithm heuristic

Python Library

# Load a cap table from CSV and analyze
from liquidation_waterfall import (
    parse_cap_table_csv,
    format_waterfall_analysis
)

calculator = parse_cap_table_csv("captable.csv")

exit_values = [15_000_000, 25_000_000, 50_000_000, 100_000_000]
print(format_waterfall_analysis(calculator, exit_values))

Build from Scratch

# Or construct programmatically
from liquidation_waterfall import (
    WaterfallCalculator, ShareClass, PreferenceType
)

calc = WaterfallCalculator()

common = ShareClass("Common", 1_000_000, 0, PreferenceType.COMMON)
series_a = ShareClass(
    "Series A", 200_000, 900_000,
    PreferenceType.PARTICIPATING, 1.0, 2.0, 1
)

calc.add_share_class(common)
calc.add_share_class(series_a)

distribution = calc.calculate_distribution(5_000_000)
print(distribution)