Exercise:

You are the M&A advisor to the shareholders of GEM Capital. The company wants to raise funds to accelerate its development. GEM Capital was founded by $2$ partners, then brought in business angels to its capital.

An investment fund is proposing to enter Series A and inject $12$ million for a pre$-$money valuation of $52$ million. The fund wishes to:

$-$ Invest in preferably $1\mathrm{.}5$x non$-$participating sharesExercise:

You are the M&A advisor to the shareholders of GEM Capital. The company wants to raise funds to accelerate its development. GEM Capital was founded by $2$ partners, then brought in business angels to its capital.

An investment fund is proposing to enter Series A and inject $12$ million for a pre$-$money valuation of $52$ million. The fund wishes to:

$-$ Invest in preferably $1\mathrm{.}5$x non$-$participating shares

$-$ offer a cash$-$out of $500$K per founder at closing against a $40\%$ discount

$-$ integrate a $15\%$ carve$-$out

$-$ add $3\%$ of ESOPs for future key employees.

In order to help your client understand the potential impacts on the cap table, your role is to model $1/$ the capital increase, $2/$ the impacts of the overall operation on the cap table and $3/$ a waterfall to simulate the proceeds of the sale at the exit and give your opinion on the proposal.$\backslash$table$[[$Actionnariat au $31/12/2023,$Cr$$ation$,$Seed$],[$NOSH$,\%$ FD$,$NOSH,$\%$ NFD$,\%$ NFD$,\%$ FD$],[$Founder $1,450\mathrm{.}0,50\mathrm{.}00\%,450\mathrm{.}0,45\mathrm{.}45\%,450\mathrm{.}0,45\mathrm{.}00\%],[$Founder $2,450\mathrm{.}0,50\mathrm{.}00\%,450\mathrm{.}0^($TT$),45\mathrm{.}45\%,450\mathrm{.}0,45\mathrm{.}00\%],[$Holding BA$,-,0\mathrm{.}00\%,90\mathrm{.}0,9\mathrm{.}09\%,90\mathrm{.}0,9\mathrm{.}00\%],[$ESOP Seed,$-,0\mathrm{.}00\%,-,0\mathrm{.}00\%,10\mathrm{.}0,1\mathrm{.}00\%],[$Total$,900\mathrm{.}0,100\mathrm{.}00\%,990\mathrm{.}0,100\mathrm{.}00\%,1,000\mathrm{.}0,100\mathrm{.}00\%],[\backslash$bar $($PPS$),1\mathrm{.}00,,2,000\mathrm{.}00,,,]]$