{"id":63,"date":"2007-12-17T12:56:57","date_gmt":"2007-12-17T16:56:57","guid":{"rendered":"http:\/\/blog.payne.org\/2007\/12\/17\/exit-allocation-analysis-who-gets-what\/"},"modified":"2007-12-17T12:56:57","modified_gmt":"2007-12-17T16:56:57","slug":"exit-allocation-analysis-who-gets-what","status":"publish","type":"post","link":"https:\/\/payne.org\/blog\/exit-allocation-analysis-who-gets-what\/","title":{"rendered":"Exit allocation analysis &#8212; who gets what?"},"content":{"rendered":"<p>Following up on my <a href=\"http:\/\/blog.payne.org\/2007\/12\/14\/the-nearest-exit-may-be-behind-you\/\" target=\"_blank\">exit analysis blog post<\/a>, Steve Kane brings up a great comment point:\u00a0 entrepreneurs should clearly understand how exit proceeds would be allocated.<\/p>\n<p>Participating stock structures can be complicated (e.g. &#8220;<em>participating preferred with a 2x multiple and 3x cap<\/em>&#8220;), and they can route a surprising chunk of the exit proceeds away from the common stockholders and to the investors.\u00a0 In many deals, a 1% common shareholder gets nowhere near $1m in a $100m exit.<\/p>\n<p>Cutting through the complexity is easy:\u00a0 make a payoff table showing what each share class gets for a range of acquisition cases (say, in $5m increments), then graph it. \u00a0 If you&#8217;re contemplating a few options, you should be able to clearly see the difference in return at various price points.<\/p>\n<p>If you&#8217;re considering a term sheet and don&#8217;t understand (or like) what you see, send your graph to your investor:\u00a0 &#8220;<em>is this what you meant?<\/em>&#8220;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Following up on my exit analysis blog post, Steve Kane brings up a great comment point:\u00a0 entrepreneurs should clearly understand how exit proceeds would be allocated. Participating stock structures can be complicated (e.g. &#8220;participating preferred with a 2x multiple and &hellip; <a href=\"https:\/\/payne.org\/blog\/exit-allocation-analysis-who-gets-what\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-63","post","type-post","status-publish","format-standard","hentry","category-entrepreneurship"],"_links":{"self":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/63","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/comments?post=63"}],"version-history":[{"count":0,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/63\/revisions"}],"wp:attachment":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/media?parent=63"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/categories?post=63"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/tags?post=63"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}