Private Equity Scenario Analysis
Calculate what your private company equity could be worth across four real-world outcomes.
Most employees and founders holding private company stock know approximately how much their equity position might be worth today on a secondary market. Few know what their specific position would generate in cash after the future liquidation scenarios, preference stack, participation rights, applicable discounts and taxes have been taken into consideration. Alpha Analytics has built a scenario-based tool to help you estimate the value of your equity position across multiple future outcomes to help facilitate optimal decision-making today.
What you put into the calculator:
Your equity position
The company's capital structure
What you get back from us:
A PDF report summarizing future scenarios and outcomes
Probability-weighted value of your equity position
A recommended liquidation strategy
Potential tax exposure
Let's get started
We'll send your personalized analysis to the email below.
Company Fundamentals
Key financial details about the company. These drive your scenario analysis.
Your Position
Tell us about the shares you hold or are evaluating.
Model Your Scenarios
We've pre-loaded four scenarios based on your company data. Adjust the values and timing to match your expectations.
Probability Allocation
How likely is each scenario? Choose a preset or customize your own allocation.
Review & Submit
Double-check your inputs below, then run the analysis.
Your analysis will be delivered to your email within 24 hours.
Analysis Submitted
Your waterfall scenario analysis is being processed.
You'll receive a detailed PDF report at
typically within 24 hours.
What is a secondary waterfall analysis?
A secondary waterfall analysis models how the proceeds of a liquidity event — an acquisition, an IPO, a secondary tender offer, or a wind-down — flow through a private company's capital structure. Preferred shareholders get paid first, often with liquidation preferences and participation rights. Common shareholders, early employees, and option holders are paid from what remains.
For anyone holding common stock, vested options, RSUs, or early-stage startup equity, the gap between the headline valuation and the actual cash outcome can be significant. A $1 billion company where you own 0.1% sounds like $1,000,000. After the preference stack is serviced, participation caps are applied, a discount for lack of marketability is taken on illiquid shares, and federal and state capital gains taxes are withheld, the real number is often less than half that — sometimes less than a quarter.
This calculator runs that math with the same framework a professional appraiser would use.
Who uses this tool?
Employees at late-stage private companies and pre-IPO startups weighing whether to accept a secondary tender offer or hold through the next round
Founders and early employees evaluating their equity position before an expected acquisition, IPO, or liquidity event
Secondary market investors benchmarking what a private company stock position is worth before making an offer
Financial advisors and wealth managers modeling a client's private company equity holdings alongside their liquid portfolio
Estate planners and tax professionals needing scenario-based valuation inputs for gifting, charitable giving, or trust strategies
Anyone holding private company stock who wants to understand the real number before making a decision that affects it
The Methodology
The inputs you provide are the same inputs a valuation analyst would ask for at the start of a formal engagement. The outputs are structured the same way they would appear in a written report.
Waterfall distribution modeling — proceeds are allocated through the preference stack in the order a liquidation agreement dictates, including seniority, liquidation preferences, participation rights, and participation caps
Scenario probability weighting — each outcome (current hold, acquisition, IPO, downside) is assigned a likelihood, and the expected value is computed across all four paths
Discount for Lack of Marketability (DLOM) — an illiquidity haircut is applied consistent with the methodologies used in professional appraisal practice, including the Chaffe, Finnerty, and Longstaff models
Tax treatment — federal and state capital gains exposure is estimated based on the holding period and jurisdiction you provide
Net Present Value (NPV) discounting — future proceeds are discounted to present value using a risk-adjusted rate appropriate to the scenario timeline
Frequently asked questions
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No. A 409A is a formal valuation performed by a qualified appraiser for IRS compliance and option strike price setting. This tool provides scenario modeling for informational purposes only. If you need a 409A, Alpha Analytics performs them — contact us.
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The math is correct. Accuracy depends entirely on the inputs. If your cap structure, probability estimates, and scenario valuations are accurate, the output will be too. If any of those are rough guesses, the output reflects those guesses. Every financial model has the same constraint.
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Private company stock cannot be sold on a public exchange. A buyer of illiquid shares demands a discount to compensate for not being able to exit when they choose. DLOM quantifies that discount. Depending on the position and time horizon, it typically ranges from 10% to over 50% of the gross value. Ignoring it leads to dramatic overestimates of what a position is actually worth.
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The preference stack is the order in which preferred shareholders (usually venture capital investors) are paid before common shareholders in a liquidity event. Each preferred round typically carries a liquidation preference — the right to receive the original investment back, sometimes with a multiplier, before common shareholders receive anything. Participation rights can compound this. The stack can consume a substantial portion of exit proceeds, especially in modest outcomes.
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You likely know more than you think. Your option grant agreement, employee stock plan documents, board-approved 409A report, or any investor communication you've received contain most of the relevant information. If you're missing pieces, use reasonable estimates and flag them as assumptions. For a more rigorous analysis, Alpha Analytics performs full engagements where we work directly with primary source documents.
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Your inputs and the generated report are stored so we can deliver the PDF to your inbox and reference the analysis if you reach out for follow-up work. We do not sell or share your data with third parties. See our privacy policy for details.
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No. Tax figures shown are rough estimates for modeling purposes only. Actual tax treatment depends on your specific circumstances, holding period, AMT position, state of residence, exemption usage, and many other factors. Consult a qualified CPA or tax attorney before acting on any tax estimate produced here.
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Yes. This calculator is a preview of what a full engagement produces. A formal engagement includes primary document review, custom modeling assumptions, sensitivity analysis across multiple variables, and a written report suitable for estate planning, gifting, tax filing support, and financial planning use cases. Contact us for scope and pricing.
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Yes. The calculator models the cash outcome of any position in private company equity. If you hold incentive stock options (ISOs), non-qualified stock options (NSOs), or restricted stock units (RSUs), you can model the gross position and the tool will project outcomes across scenarios. Tax treatment differs between instrument types — use the estimated tax figures as directional only, and confirm with a tax professional.
Disclosures:
This calculator and the accompanying report are provided for informational and educational purposes only. Nothing presented constitutes investment advice, legal advice, tax advice, financial planning advice, or a formal valuation opinion. The outputs are scenario projections based on user-supplied inputs and should not be relied upon as the sole basis for any investment, tax, estate planning, or financial decision.
Alpha Analytics, LLC is not a registered investment adviser and does not provide personalized investment recommendations through this tool. The methodologies applied reflect standard valuation practice but do not constitute a 409A valuation, a fairness opinion, or a certified appraisal under USPAP or any other professional standard. Users are strongly encouraged to consult qualified financial, tax, and legal professionals before making any decision affecting their equity holdings.
Modeled scenarios are not indicators of future results. All private company investments carry substantial risk, including risk of total loss. Private company stock is illiquid, and there is no guarantee that any liquidity event will occur or that modeled scenarios will reflect actual outcomes. Probabilities and valuations assigned by the user are assumptions, not predictions.
By using this calculator, you acknowledge that Alpha Analytics, LLC bears no liability for decisions made based on the output generated.