Exit planning
Read the breakeven points in an exit model
Understand the sale values where an exit waterfall changes shape: debt repaid, the preference stack cleared, and each preferred class or SAFE converting.
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One sale price answers one question
A single exit value tells you what each holder receives at that price. It does not tell you how close the answer is to changing. Breakeven points are the sale values where the waterfall changes character, and they are usually more informative than any one scenario: they mark the thresholds a negotiation is actually about.
The four kinds of breakeven
Cap Table searches the waterfall for the values where a specific event first becomes true, and lists each one it finds.
| Point | Meaning |
|---|---|
| Convertible notes repaid | Below this, note principal and interest is not covered in full. |
| Preference stack cleared | Below this, everything goes to notes and preferred (and to any SAFEs taking their money back), and common gets nothing. |
| A preferred class converts | Above this, converting to common beats taking that class’s preference. |
| A SAFE converts | Above this, converting beats taking the money back on that instrument. |
Conversion points are listed for non-participating classes, which are the classes whose election can flip on the sale price alone. The points are found by re-running the whole waterfall at each candidate value, so they reflect the recorded terms rather than a simplified formula.
Use the points as a map
Select a breakeven to inspect the waterfall at that value, then compare a scenario just below it with one just above. The difference between those two answers is what the threshold is worth to each holder.
A useful pattern before a term-sheet discussion: note the value where common first receives anything, the value where each preferred class would rather convert, and the width of the band where a capped class is capped. Those three facts explain most of the shape of the curve.
In the app, the breakeven card fills in as the search runs and reports the points found, and lists nothing when a cap table has no such thresholds. It does not run at all for a cap table carrying dated participation-cap or dividend terms, or recorded dividend events; compare those classes at explicit sale values instead.
Read a threshold as a modeled value
A breakeven is calculated from the recorded terms on the model date. Change an instrument, a class right, or the date, and the thresholds move. They also exclude escrow, fees, and tax, so a real transaction can cross a modeled threshold at a different headline price.
Save the scenarios you compared and the assumptions behind them. See Save, update, and compare scenarios for what a saved scenario retains and when it recalculates.