Tools
Estimators for the four numbers that decide a private-market outcome
Fee drag over the hold, a realistic exit window, the preference stack, and what actually lands in your account. Change the inputs and the arithmetic updates — and every worked example is written out below, so you can check the maths by hand.
Private-market projections tend to arrive as a single multiple. These four calculations are what turn that multiple into an expectation you can defend. Run them before you commit, not after.
Of the gross return, how much reaches you? Fee layers multiply across the hold rather than adding once.
- Net annual return—
- Value at the gross return, for comparison—
- Total cost of the fee layers—
- Share of the gross gain consumed by fees—
Illustrative arithmetic, not a projection. Assumes constant annual compounding, fees charged on the same base each year, and carry applied to the return above the preferred return. Real fund terms differ — substitute the figures from the offering documents. Private investments can lose their entire value.
Realistically, when could this become cash? Add the stages instead of trusting the headline term.
- Company consent—
- Right of first refusal period—
- Settlement—
- Plan against the floor, not the average—
Illustrative. These stages are sequential in most transfers, and any one of them can extend. On the exit side, if the route is a future company tender offer the binding constraint is the company’s programme calendar rather than your intention — and there may not be one this year. Plan an exit as a range with a floor, never as a date.
At a given exit value, what does common stock actually receive? Preferred capital is paid first.
- What happens—
- Paid to preferred first—
- Remaining common pool—
- Your effective share of the exit—
Simplified. Real waterfalls add seniority between rounds, accrued dividends, participation caps, and management carve-outs, any of which changes the answer. The governing documents control — read them, and see preference stacks and waterfalls.
What lands in the account? Subtract in order: fees, then tax on the character of the gain.
- Transfer and platform fees—
- Taxable gain—
- Estimated tax—
- Distance below the sticker price—
Illustrative and not tax advice. Assumes a single blended rate on the whole gain; real treatment depends on holding period, the character of the gain, alternative minimum tax, qualified small business stock, and your state. Inside a self-directed retirement account the tax line changes entirely — see Investor Services. Consult a qualified professional.
The same four, worked by hand
Every calculation above is arithmetic you can do on paper, so here it is on paper. If a sponsor’s projection disagrees with one of these, the disagreement is the interesting part.
1. Fee drag over the hold
Worked: a fund grosses 12% a year for eight years. Management fee 2% annually, a 1% platform or feeder fee, and carry of 20% over an 8% preferred return with a full catch-up — the market-standard soft hurdle. Fees take the 12% down to 7.2% net. On $100,000 that compounds to about $174,400 against $247,600 at the gross rate, so the fee layers consume roughly half of the gross gain. Switch the hurdle to hard and net rises to 8.8% and about $196,400 — that single term is worth $22,000 here. One extra 1% feeder layer costs about another $10,100.
Inputs to gather first
- Management fee, and whether it is charged on committed or invested capital.
- Carried interest, the preferred return, and whether the hurdle is hard or soft — the calculator above prices the difference.
- Every intermediate layer: feeder, platform, placement, administration.
- Expected hold in years — fee drag compounds, so the hold length matters as much as the rate.
2. Hold-period and exit window
Worked: a secondary purchase in a venture-backed company. Company consent 2–6 weeks. Right of first refusal period 30 days. Settlement 1–2 weeks. That is roughly two to three months to enter. On exit, if the route is a future tender offer, the binding constraint is the company’s programme calendar, not your intention — and there may not be one this year. Plan the exit as a range with a floor, never as a date.
3. Dilution and the preference stack
Worked: a company exits at $200 million carrying $120 million of preferred with a 1× non-participating preference. Preferred takes $120 million or converts, whichever is better; common divides the remainder across the fully diluted count. A 0.5% common stake is not 0.5% of $200 million — after the stack it may be closer to 0.5% of $80 million. Preference stacks and waterfalls works this through.
4. Net proceeds at exit
Worked: $150,000 of shares sold. Transfer and platform fees around 2% ($3,000). Long-term capital gains on a $90,000 gain at a 23.8% federal rate is about $21,400, before state tax. Net near $125,600 — some 16% below the sticker. Inside a self-directed retirement account the tax line changes entirely; Investor Services covers that mechanics.
What these tools deliberately do not do
- They do not value a company or an offering, and they produce no price.
- They do not recommend, score, or rank anything — the evaluation is yours.
- They do not suggest how much of a portfolio belongs in private markets. Here is why we do not publish that number.
Compare offerings → Fund structures
Worked examples and calculator outputs are illustrative arithmetic using inputs you supply — not projections, quotes, valuations, or tax advice. Rates, fee terms, and transfer provisions vary by offering; substitute the actual figures from the governing documents and consult a qualified professional.
Educational only. InvestNow is a demonstration platform. This page is general information, not investment, legal, or tax advice, and not an offer or solicitation of any security. Private-market investments are speculative, illiquid, and can lose their entire value. Consult a qualified professional about your circumstances.