An entrepreneur has 1000 shares of the venture. An early investor invested $12,000 for 4000 shares...
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An entrepreneur has 1000 shares of the venture. An early investor invested $12,000 for 4000 shares that included a full ratchet provision. Now, in a subsequent round, an investor is willing to invest $6,000 for 30% of the ending equity. If there had been no ratchet provision, (a) [8 points] how many shares would the new investor need to achieve a 30% interest, and (b) [8 points] what would be the implied value per share? With the ratchet, (c) [8 points] what would be the price per share, (d) [8 points] how many shares would be outstanding, and (e) [8 points] what would be the total implied value of each party's shares? An entrepreneur has 1000 shares of the venture. An early investor invested $12,000 for 4000 shares that included a full ratchet provision. Now, in a subsequent round, an investor is willing to invest $6,000 for 30% of the ending equity. If there had been no ratchet provision, (a) [8 points] how many shares would the new investor need to achieve a 30% interest, and (b) [8 points] what would be the implied value per share? With the ratchet, (c) [8 points] what would be the price per share, (d) [8 points] how many shares would be outstanding, and (e) [8 points] what would be the total implied value of each party's shares?
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To calculate the answers lets go through each question step by step a Without the ratchet provision the new investor wants to achieve a 30 interest We... View the full answer
Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
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