Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A VC-backed company has agreed to be acquired. Assume there are three classes of stock: common, Series A preferred, and Series B preferred. Series B

A VC-backed company has agreed to be acquired. Assume there are three classes of stock: common, Series A preferred, and Series B preferred. Series B is senior to Series A, and Series A is senior to common stock. Seniority grants that the senior class gets its liquidation preference fulfilled before any proceeds are distributed to lower classes. Total investment into the company was as follows: Series B: $10 million, 1x liquidation preference, non-participating; convertible to common stock on a 1:1 basis Series A: $3 million, 1x liquidation preference, non-participating; convertible to common stock on a 1:1 basis Series B investors hold 50% of shares, Series A investors hold 15% of shares, and Common shareholders hold 35% of shares. The company is acquired for $10 million. How much of the proceeds will go to Series B shareholders, Series A shareholders, and common shareholders, respectively

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mergers And Acquisitions Integration Handbook

Authors: Scott C. Whitaker

1st Edition

111800437X, 978-1118004371

More Books

Students also viewed these Finance questions

Question

How can job analysis make staffing more strategic?

Answered: 1 week ago