Assume there has been only one round of financing for Itsy.com (a Round A investment of...
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Assume there has been only one round of financing for Itsy.com (a Round A investment of $5 million in convertible participating preferred at a $10 million pre-money valuation). If converted, the Round A investors would own 33% (rounded) of the company ($5M/($10M + $5M)) and the entrepreneur would own 67% (rounded). Now assume that the company has an offer to be acquired for $30M. The Round A investor preferred shares have a liquidation preference and participate with a 3X cap. How much will the investor receive in total proceeds? Assume there has been only one round of financing for Itsy.com (a Round A investment of $5 million in convertible participating preferred at a $10 million pre-money valuation). If converted, the Round A investors would own 33% (rounded) of the company ($5M/($10M + $5M)) and the entrepreneur would own 67% (rounded). Now assume that the company has an offer to be acquired for $30M. The Round A investor preferred shares have a liquidation preference and participate with a 3X cap. How much will the investor receive in total proceeds?
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To calculate the proceeds for the Round A investor in the acquisition scenario we need to consider t... View the full answer
Related Book For
Intermediate Financial Management
ISBN: 978-1111530266
11th edition
Authors: Eugene F. Brigham, Phillip R. Daves
Posted Date:
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