According to the above data, the investor's share (convertible preferred stock) is 33% ($5 million/($10m+5 million)), the priority liquidation amount is $ 10M(5M x 2), and the upper limit of liquidation return is $20 million (5M x 4).
1. If the value of the company at the time of liquidation is lower than the investor's priority liquidation amount, that is, $ 10M, then the investor will take it all.
2. If the value of the company at the time of liquidation is higher than USD 60 million, then the investor will convert the preferred shares into common shares and distribute the liquidation value to the shareholders of common shares in proportion (33%), and the investor will get a return of more than USD 20 million (60× 33%), regardless of the upper limit of the liquidation return of preferred shares (USD 20 million).
3. If the value of the company at the time of liquidation is between $65,438+00m and $60 million, investors will first get the priority liquidation amount ($65,438+00m), and then distribute the remaining liquidation value to ordinary shareholders in proportion to their shares. At this time, there will be an interesting situation: when the liquidation value is between $40 million and $60 million, after investors take away the priority liquidation amount, the remaining liquidation value is $300-50 million, and the amount that investors can theoretically distribute according to the proportion of shares is 10- 16.7M, and the return obtained by adding the two items is10.
The specific return is shown in the following figure: