Liquidation preference vs convert election calculator

"""Liquidation preference vs convert election.

Authored as STUD.com's own term-sheet planning tool for the illustrative
$1,000,000 pre-seed target (labeled illustrative, not a committed raise).
Given an exit value, it returns the rational preferred-holder election
(take the liquidation preference, or convert to common) and the resulting
proceeds split, under the stated assumptions: a single preferred class,
no debt, no option pool, residual to common shared pro rata, and the
preferred holder owning preferredOwnershipFraction of fully-converted shares.

Worked illustrative STUD scenario: a 1x non-participating preferred that
invested $1,000,000 for 20% would convert at any exit above $5,000,000
(where 0.20 * exit exceeds the $1,000,000 preference); at a $10,000,000
exit it converts and takes $2,000,000, leaving $8,000,000 to common.
"""


def electionPayout(input):
    typ = str(input["type"]).strip().lower()
    exit_v = float(input["exitValue"])
    invested = float(input["investedAmount"])
    mult = float(input["liquidationMultiple"])
    own = float(input["preferredOwnershipFraction"])
    preference = mult * invested

    if typ == "non_participating":
        # The holder takes the higher of the straight preference (capped by
        # the exit value itself) or the as-converted pro rata share.
        convert_value = own * exit_v
        if convert_value > preference:
            election, preferred = "convert", convert_value
        else:
            election, preferred = "take_preference", min(preference, exit_v)
    elif typ == "full_participating":
        # Preference first, then pro rata participation in the residual.
        # Converting can never beat this, so the election is always
        # take_preference; below the preference the holder sweeps the exit.
        if exit_v >= preference:
            take = preference + own * (exit_v - preference)
        else:
            take = exit_v
        election, preferred = "take_preference", min(take, exit_v)
    elif typ == "capped_participating":
        # Participation is capped at capMultiple * invested; past the cap
        # the rational holder converts when pro rata exceeds the capped take.
        cap_value = float(input["participationCapMultiple"]) * invested
        participating = min(preference + own * max(0.0, exit_v - preference),
                            cap_value)
        convert_value = own * exit_v
        if convert_value > participating:
            election, preferred = "convert", convert_value
        else:
            election, preferred = "take_preference", participating
    else:
        raise ValueError("unknown preference type: " + typ)

    common = exit_v - preferred
    return {
        "election": election,
        "preferredProceeds": round(preferred, 2),
        "commonProceeds": round(common, 2),
    }