In 2018, You and your friend from college started a private company. At that time, You decided to keep 7,500 shares and your friend to have 2,500 shares.After one year and half, your sister decided to invest $20,000 for 40% equity stake in your business.

In November 2020, all shareholders decided to sell 30% of equity in business to another private company for $300,000. The new private company made a counteroffer to take 30% stake into the business for $15,000.

Structure the deal for the 2 financing rounds and determine the value of the firm at each stage, the % of ownership, no of total shares

Please explain what is the best deal for you and your friend after the two financing rounds and all scenarios. Why? Why not?

Show your formulas and calculations under each scenario and present your solutions below.