Question: Continuing with our lecture examples, Max has invested in another of Sam's companies. This time, he pays $3 million for 30 percent of SpecialStuff (SS).

Continuing with our lecture examples, Max has invested in another of Sam's companies. This time, he pays $3 million for 30 percent of SpecialStuff (SS). Calculate the payout table and draw the graphs for Sam and Max in the following situations:

a.The deal is structured as all-common, and PredatoryPurchaser (PP) offers Sam $3.5 million for the company.

b.The deal is structured as redeemable preferred with cheap common, and PredatoryPurchaser offers Sam $3.5 million for the company.

c.The deal is structured as convertible preferred, and PredatoryPurchaser offers Sam $5 million for the company. At what price will Max convert to common?

d.SpecialStuff goes public at a valuation of $20 million, and Max owns participating convertible preferred.

e.OtherStuff, a private company, buys SpecialStuff for $7 million. Max owns participating convertible preferred.

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