Question
A start-up company needs $2 Million funds to finance their growth. A venture capitalist approached the shareholders to provide them with the funds needed but
A start-up company needs $2 Million funds to finance their growth. A venture capitalist approached the shareholders to provide them with the funds needed but the required return per year demanded is 40% for the next 5 years.
Estimated EBITDA of the firm for the current year is $200,000 which is expected to be increased by 30% per year. Estimated EBITDA multiple at the end of year 5 is 20 while the company expects to have $300,000 cash and no interest-bearing debt at that time.
Calculate:
- The percentage of ownership to be given to venture capitalist (4 marks)
- Post Money and Pre Money values (2 marks)
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Valuation The Art and Science of Corporate Investment Decisions
Authors: Sheridan Titman, John D. Martin
3rd edition
133479528, 978-0133479522
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