Question: Based on the following data, determine a reasonable valuation that an investor would place on your company in issuing a term sheet to make an
Based on the following data, determine a reasonable valuation that an investor would place on your company in issuing a term sheet to make an investment in your company. Note that all amounts stated in the assumptions, except for estimated revenues that are based on the financial projections for your company, are based on comparables for companies similar to yours who are operating in your industry. (1) Estimated revenues in year 5 (assumed exit year) - $25 million (2) After tax earnings in the year of exit are estimated at 12% of revenues, or $3 million. (3) PE ratio in the year of exit is 20X (4) Exit values approximate 2X of revenues in the exit year (5) The investors desired IRR yield based on the Wiltbank Study is 20X. The investor investing $750000 average exit value What is the post-money value? What is the pre-money value? What is the post-money ownership for the investor? What is the post-money ownership for the founders/owner?
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