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Currently, it is 2023 and you need to raise additional capital to expand your business. You have decided to take your firm public through an
Currently, it is 2023 and you need to raise additional capital to expand your business. You have decided to take your firm public through an IPO. You would like to issue an additional 6.5 million new shares through this IPO. You currently have $4.0 million in cash (net of debt), and forecast earnings before interest and taxes of $8.0 million this year. a. Your investment banker advises you that the prices of other recent IPOs have been set such that the enterprise value/EBIT ratios based on 2023 forecasted earnings average 24.0. Assuming that your IPO is set at a price that implies a similar multiple, what will your IPO price per share be? b. What percentage of the firm will you own after the IPO? a. Your investment banker advises you that the prices of other recent IPOs have been set such that the enterprise value/EBIT ratios based on 2023 forecasted earnings average 24.0. Assuming that your IPO is set at a price that implies a similar multiple, what will your IPO price per share be? The enterprise value of the firm at the IPO is $ million. (Round to the nearest integer.)
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