As Diligent Equity usage is growing, our customer base is widening, encompassing many venture capital and, lately, a steadily increasing number of private equity funds. Naturally, we are getting a lot of feature requests. Prioritizing these is always a tough call, but recently we are getting increasing demands for implementing a distribution waterfall that can cater to some specific needs of private equity backed companies, especially with regard to profit interest type of stock awards.
What is included in our LLC Cap Table and Waterfall Tool?
To meet this demand, we’ve introduced a new company type, LLC, and implemented a new waterfall which is better suited to the needs of our private equity customers. By creating an LLC type of cap table, you will be able to award profit interest stock to your executives (and make them dependent on your fund’s returns, excluding co-investors from MOIC and IRR calculations), calculate returns based on a nominal unit price, and calculate vesting and distributions accurately. To further improve the user experience, we’ve also updated the user interface to accurately reflect private equity fund terminology, like using “units” instead of “shares”, while existing functionality in Diligent Equity is not affected by this change at all. Watch a short demo below!
But this is just the first step in our journey. While the new LLC waterfall’s calculations are still based on stock unit numbers, we are aware that a lot of our customers are basing their distributions simply on the invested amount. So this is our roadmap for the next few months:
- Add IRR based vesting schedules to the currently implemented MOIC based schedules to the LLC waterfall .
- Improve the Waterfall page UX in connection with LLC waterfalls .
- Implement another waterfall algorithm based on investment amounts .
All of the above features will be available over the next few months. Stay tuned.
To learn more about the LLC waterfall, request a demo and our team will be happy to show you how we can save you time and money in your quarterly reporting needs.