Question
Assume there has been only one round of financing for Itsy.com (a Round A investment of $5 million in convertible participating preferred at a
Assume there has been only one round of financing for Itsy.com (a Round A investment of $5 million in convertible participating preferred at a $10 million pre-money valuation). If converted, the Round A investors would own 33% (rounded) of the company ($5M/($10M + $5M)) and the entrepreneur would own 67% (rounded). Now assume that the company has an offer to be acquired for $30M. The Round A investor preferred shares have a liquidation preference and participate with a 3X cap. How much will the investor receive in total proceeds?
Step by Step Solution
3.40 Rating (162 Votes )
There are 3 Steps involved in it
Step: 1
To calculate the proceeds for the Round A investor in the acquisition scenario we need to consider t...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
Students also viewed these Finance questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App