Liquidation preferences on share classes and their effect on your exit simulation.
The liquidation preferences you set in the cap table share management only affects the exit simulation and has ho effect on the rest of the admin portal.
Here is an explanation of the liquidation preferences in the share class setup:
| Type | Description | How it affects exit simulation |
| Seniority | Decides the order of what share class gets preference payout first. | Higher seniority get their preference payout first. Equal seniority gets the payout at the same round. A seniority of 0 means it has no seniority. |
| Multiple | A multiplier on the investment amount that will be paid out to the shareholder in a preference round payout. | Preference payout is a maximum of the investment amount multiplied with the multiplier. |
| Catch up | The share class will catch up to the selected share class by receiving the same payout per share in its preference round. Seniority must be lower than the share class it catches up to. | Instead of receiving a multiple on their investment amount in its preference round, they will receive the same per share as the share class it catches up to. |
| Participating | A preference share class can participate in the common share payout round in addition to its preference round. Conversion ratio is applied in the participation. | The amount of participating preference share times conversion ratio is entered to receive payout in the common share round. |
| Cap on participating | Sets a limit to the amount that can be paid out for the share class and is a multiple of the investment amount. | Not fully implemented. If the cap is reached for any shareholder, an error message will be shown. |
| Interest rate | A yearly non-compounding interest rate on the investment amount. | Not implemented. If any share class has interest rate a warning will be displayed in the simulation result table. |
| Conversion ratio | A multiplier for a preference share when converting to common shares. Applies both when a preference share is participating, and if a non-participating share class wants to convert to common shares instead of getting paid the preference amount. | All participating shares are multiplied by this. Also used when calculating if a preference share class would profit from converting to common shares. |
