Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A VC firm, Everest Partners, is considering making an investment to a start-up company, OutReach Networks. OutReach currently, has 1000 shares, and 70% of the

A VC firm, Everest Partners, is considering making an investment to a start-up company, OutReach Networks. OutReach currently, has 1000 shares, and 70% of the shares are held by the founder. As a tech company in early stage, OutReach needs $50 million from VC as first-round financing. The target rate of return that the VC firm requires is 50%, and the expected horizon of investment is 7 years. The projected EBITDA of OutReach at year 7 is $350 million. By examining the public firms in the market, the VC firm finds a comparable firm to OutReach that does business in the same industry. The comparable firm currently has a market capitalization of $2,000 million, $700 million worth of debt outstanding, and EBITDA of $300 million.



What is the EV-to-EBITDA ratio of the comparable firm?

Step by Step Solution

3.39 Rating (124 Votes )

There are 3 Steps involved in it

Step: 1

To evaluate the potential investment in OutReach Networks we need to calculate the companys premoney ... blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Engineering Economy

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

16th edition

133439275, 133439274, 9780133819014 , 978-0133439274

More Books

Students also viewed these Finance questions