An investor purchases shares of a company at $55. The company paid a $3 annual dividend which
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What is the expected return per year on this transaction?
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A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco. The terms specify that EBV invests $5 million for 5M shares into Newco, which currently has 10M shares allotted to employees and founders. Security structure is as follows: First pay [one] times the Original Purchase Price on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock pro rata on an as-converted basis. Each share of Series A Preferred (PCP) will automatically be converted into Common Stock with QPO at $5 per share. if the exit is $72, how much is the distribution to the VC? A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco. The terms specify that EBV invests $5 million for 5M shares into Newco, which currently has 10M shares allotted to employees and founders. Security structure is as follows: First pay [one] times the Original Purchase Price on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock pro rata on an as-converted basis. Each share of Series A Preferred (PCP) will automatically be converted into Common Stock with QPO at $5 per share. if the exit is $72, how much is the distribution to the VC?
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To calculate the expected return per year on this transaction we need to consider both the dividend ... View the full answer
Related Book For
Venture capital and the finance of innovation
ISBN: 978-0470454701
2nd Edition
Authors: Andrew Metrick
Posted Date:
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