Capital Waterfall Solution - A Better Way to Determine What is Your Share of the Distribution Waterfall
What Problem We Solve? Capital Waterfall Scenario Modeling Solution solves the problem of managing complex capital tables through the deal process. Our solution applies the actual legal provisions in investment documents, rather than just assumed pro forma impacts. You can’t close a deal with pro forma reports. There can only be one correct distribution waterfall and our Solution is the best way to achieve 100% accuracy in applying the legal provisions affecting your capital table in both financings and M&A.
What’s in it for You? The Capital Waterfall Solution helps clients structure better deals, accelerate closings, maximize securityholder value, and reduce deal execution risks. Imagine seeing the impact on each securityholder of multiple scenarios and deal structures in real time. Know exactly what your securities are worth and how the legalese in the investment documents impact your share of the waterfall.
How it Works? Our Solution transforms your investment documents into dynamic closing binders, validated securities data, security class attributes, and legal formulas. This data and formula are then input into our Excel model that applies the “Rational Investor Algorithm” to determine for each securityholder which legal rights to exercise to maximize economic return at various valuations.
How do Reports Help Through the M&A Process? Customizable reports are delivered from our Deal Report Center and mapped to each phase of the deal to provide timely insights:
Deal formation - model multiple valuations and gain insights from the data;
Board approval - accurate report for each class, group and individual securityholder;
Securityholder approval - see IRR and return multiples for each security;
Representations and warranties - reduce disputes, holdbacks, setoffs and litigation risks; and
Rights analysis - measure impact of net exercise, and of assumption vs exercise of options.
How Reliable are the Reports? We understand that deal leaders need accurate information with a validation history that can be quickly reviewed by counsel and deal advisors. So, we provide a supporting “Validation Report” that shows the securities data, deal assumptions and legal formulas that were used in generating your deal report. This enables the entire deal team to drill down to verify any assumptions or changes that impact a report.
How is the Solution Implemented? The Solution is implemented quickly and cost effectively using our consultants and our offshore legal services support team following our standard procedures for scalable and auditable results. Because of the extensive effort to build and test our Solution, it can be implemented and generating reports in a few days with an upload of your capital table management software data.
What does the Solution Cost? Our Solution can be implemented incrementally, starting with an upload of your company’s cap table data and our standard reporting packages for as little as $20,000. We have a deal readiness assessment of your cap table, which can guide our professional services team with Investment document clean up, additional configuration for unique securities provisions and unique reports as necessary over the deal lifecycle.
Who Created Capital Waterfall? Our Solution is a collaboration of Tilt Analytics and Dynamic Deal Advisory with a combined 50+ years of Wall Street deal management, complex financial modeling and consulting expertise. Please reach out to see if we can be of service to ensure you get your share of the distribution waterfall.