Using the current generation of London politicians as an example, maybe we'd get something like this.
Initially, Sir Vince Cable and Boris Johnson immediately have over 20% of the vote, so they are elected and can choose who to give their remaining vote share to. Boris Johnson chooses to give his additional 3% vote to his brother Jo Johnson, rather than Ian Duncan Smith who is ahead of him. Vince Cable gives his remaining 1% to fellow Lib Dem Ed Davey.
No one else has 20% of the vote, so one by one the lowest scoring candidate that remains is eliminated. This continues much as you'd expect, with each party keeping their vote within their own ranks.
This continues until Kier Starmer, until 7% of the vote, is eliminated and passes his vote to Diane Abbott on 18%, giving her 25% of the vote.
Diane Abbot is elected, with 5% of the vote to spare.
Diane Abbott is the last Labour candidate remaining. She has 5% of the vote left which she can donate.
The remaining candidates she can donate her 5% of the vote to, are:
Sian Berry - Green
Sir Ed Davey - Lib Dem
Jo Johnson - Conservative.
Or she can scrap the 5% of her vote.
She doesn't want Jo Johnson to be elected. If she scraps her vote, the "pass threshold" is lowered from 20% to approximately 18.8% and the candidate with the lowest remaining score is Sir Ed Davey.
Sir Ed Davey would be eliminated and would likely choose to elect Conservative Jo Johnson over Green Sian Berry - which is not what Diane Abbot wants.
So Diane Abbott decides to donate her 5% to get either Green Sian Berry or Lib Dem Sir Ed Davey elected
She feels her policies are more similar to Sir Ed Davey's so chooses to get him elected.
So the result is
Lib Dem - 2
Labour - 1
Conservative - 1
Although they are serving as individual candidates from this point forward anyway