Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 

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... 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

Intermediate Financial Management

Authors: Eugene F. Brigham, Phillip R. Daves

11th edition

978-1111530266

More Books

Students also viewed these Finance questions

Question

Record any necessary adjustment under FIFO

Answered: 1 week ago

Question

-4 1 9. Let A = Find A-1, (A") and verify that (A")= (A-1)".

Answered: 1 week ago