Question
1. You are the CEO of a private company and want to buy it. There is one major shareholder who owns 70 percent of the
1. You are the CEO of a private company and want to buy it. There is one major shareholder who owns 70 percent of the firm. The remaining 30 percent is held by oceanic shareholders. Based on a DCF model, you estimate the base value of the firm to be $150 million. This excludes any liquidity discount and/or control premium. Based on your observations of the market, liquidity discounts are about 20 percent and control premiums are about 30 percent for similar deals. Your firm has 75 million shares outstanding. What would you offer to pay per share to the controlling shareholder? To the oceanic shareholders?
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