Prior to closing the deal for Fur Foods.com Dan Reinhardt determines that Fur Foods and Finery.com...

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Prior to closing the deal for Fur Foods.com Dan Reinhardt determines that Fur Foods and Finery.com will need additional funding in Year 4 to continue the growth needed to hit the Year 5 net income target of $12.5 million. Since Jonas' options are limited, Dan is in a position to demand dilution protection. Assuming that an additional 12% of the company will need to be sold in Year 4 to raise the additional capital, what percentage ownership should Reinhardt Capital demand today (at closing) to ensure that the firms ownership remains undiluted after the next round of funding? Prior to closing the deal for Fur Foods.com Dan Reinhardt determines that Fur Foods and Finery.com will need additional funding in Year 4 to continue the growth needed to hit the Year 5 net income target of $12.5 million. Since Jonas' options are limited, Dan is in a position to demand dilution protection. Assuming that an additional 12% of the company will need to be sold in Year 4 to raise the additional capital, what percentage ownership should Reinhardt Capital demand today (at closing) to ensure that the firms ownership remains undiluted after the next round of funding?

Answer rating: 100% (QA)

To ensure that the ownership of Reinhardt Capital remains undiluted after the next round of funding ... View the full answer