Assumptions and calculations

1. Exit proceeds

The offer is an all-cash acquisition with one preferred investor class and three common groups: the founder, the team and other common holders. All ownership percentages are fully diluted and already include the team allocation. The team’s shares are treated as fully vested and already exercised.

1. Subtract the assumed transaction costs from the acquisition consideration.
2. Calculate the preferred claim: invested capital multiplied by the preference multiple. A claim cannot consume more than the distributable pool.
3. For non-participating preferred, compare the preference with the investor’s as-converted common proceeds. Take the better result. At a tie, convert. A preference payment and a conversion payment are mutually exclusive.
4. For uncapped participating preferred, pay the preference first, then distribute the remainder across all as-converted ownership percentages.
5. For a non-participating investor taking the preference, distribute the remainder only among the common holders, in proportion to their relative common ownership.
6. Subtract the founder’s illustrative tax. Investor and employee personal taxes are not modeled.

The default offer is $100 million. Investors put in $30 million and own 40%; the founder owns 40%, the team 10%, and other common holders 10%. With a 1× non-participating preference, 2% costs and a 25% illustrative founder tax rate, the investor converts and the founder receives $29.4 million net. Turning on uncapped participation, with every other assumption unchanged, reduces the founder’s modeled net cash to $20.4 million.

What this does not model

Multiple preferred classes, seniority negotiations, participation caps, SAFEs, convertible notes, dividends, warrants, anti-dilution, outstanding option exercise prices, unvested options, debt, earn-outs, escrow, management carve-outs or non-cash consideration. The tax is an adjustable arithmetic assumption, not a country’s tax law. No reliefs, treaties, deductions, withholding or personal circumstances are modeled. For a real transaction, review the actual documents with qualified legal and tax advisers.

A separate plain priced-round dilution helper is included in the source, but the interface begins after funding. It does not simulate a sequence of financing rounds.

Background reading

The mechanics were checked against Morrison Foerster’s explanation of liquidation preferences and Carta’s overview. These explain common structures; neither determines the terms of your transaction or endorses this project.

2. Liquidity

The starting capital is either the $5 million example or a snapshot of the founder’s net exit cash. Every asset is valued in USD. Only the family expense is denominated in ILS. The starting rate of 3.60 ILS per USD is a chosen example, not an observed or current exchange rate.

The six asset allocations sum to 100%. Cash balances manual changes. Presets are fictional compositions, not recommended investments. Public shares and bonds are assumed saleable at the displayed stressed values within 30 days. Property, private equity and the new company cannot be sold within that window. These assumptions intentionally simplify settlement, liquidity and sale costs.

A stipulated joint shock

The market switch applies losses of 35% to public shares, 8% to bonds, 12% to property, 20% to private equity and 50% to the new company. Cash is unchanged. These percentages are invented stress inputs, not historical estimates, expected returns or probabilities. Simultaneous losses illustrate shared exposure; no statistical correlation model is claimed.

The currency switch reduces the USD/ILS rate by 20%, from 3.60 to 2.88. This leaves USD asset values unchanged and raises the USD amount needed for an ILS expense. The engine also reports the portfolio’s ILS purchasing value.

The result is a snapshot before obligations are paid. A capital call is a demand for cash, not an investment loss automatically deducted from wealth. Any new fund interest or business stake that payment might create is not posted here. The model does not execute sales, borrow, predict a fund’s capital calls or simulate consequences of default. Twenty-year returns, inflation, withdrawals, leverage, fees and sale taxes are outside this version.

Background reading

The SEC’s investor education site discusses the illiquidity of private equity funds and asset allocation and diversification. Those sources provide context, not the invented scenario percentages used here.

3. Insurance

This chapter uses a separate fictional business balance sheet. Its cash is not automatically taken from the personal portfolio. The gross loss comprises 50% incident-response costs, 25% business-interruption loss and 25% ransom. All amounts are assumed due within 30 days.

Response costs are assumed eligible under this fictional contract. Business-interruption eligibility can be switched off. When it is on, a waiting period reduces the five-day interruption loss proportionately, then an interruption sublimit applies. Ransom is excluded by default; switching it on assumes eligibility solely for this arithmetic example. Real legality, sanctions, consent and policy conditions are not assessed.

The ordering is deliberate: category exclusions and the interruption sublimit, then one aggregate deductible, then the overall limit. Actual contracts may apply these terms differently. A real claim can depend on many other terms and facts.

The default $1.2 million loss includes $900,000 of eligible loss. A $100,000 deductible leaves an $800,000 payment within the $1 million limit, so the business retains $400,000. But its $750,000 cash is insufficient to pay the full loss within 30 days if the insurer only pays on day 60: the temporary cash gap is $450,000.

Payment delays are chosen assumptions. The model does not claim that a covered claim will be accepted or paid on that schedule. Premiums, legal disputes, defense costs beyond the fixed breakdown, restoration of limits, multiple incidents, coinsurance and financing costs are excluded. The comparison shows retained incident loss, not the total cost or suitability of an insurance product.

Background reading

The NAIC’s cybersecurity overview describes the variety of cyber exposures and the customized nature of cyber policies. The contract and numerical example here are invented, not a quoted or recommended policy.

Arithmetic you can inspect

The website and engines use TypeScript. Money enters and leaves the engines as integer cents. Intermediate products use BigInt. Proportional allocations use the largest-remainder method so every distributed cent is accounted for; input order breaks equal remainders. Fees and tax round down to a cent. A required foreign-currency expense rounds up so the model does not understate the cash needed.

The large display values are rounded for readability. Each calculation receipt shows cents. The downloadable JSON includes the exact inputs and results. Invalid values, overallocated cap tables and portfolios, and unsupported scenario versions are rejected.

Regression cases and reproducible property tests check conservation of exit proceeds, nonnegative distributions, portfolio totals, insurance payment bounds, and retained loss plus insurer payment equaling gross loss. Tests check the stated model; they do not validate its suitability for a real decision.

Your numbers stay here

Calculation runs in the browser. There are no accounts, financial-data uploads, live market feeds or analytics scripts in the app. The host still receives ordinary website requests. Saved scenario links store inputs in the URL fragment, which browsers do not send to the web server. Anyone you give that link to can read the inputs. Downloads are generated locally.

The code is open source under the MIT license. The bundled Inter font has its own SIL Open Font License. You can inspect, reproduce or extend the models. No employer, financial institution or cited organization is presented as a partner or endorser.