Question
QUESTION TWO [30 MARKS] A VC invests $3 million in convertible preferred stock in a company with a $9 million pre-money valuation. The term sheet
QUESTION TWO [30 MARKS]
A VC invests $3 million in convertible preferred stock in a company with a $9 million pre-money valuation. The term sheet shows the investment is non-participating with 1x liquidation preference.
- Assume the preferred stock is participating. At an exit value of $16,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)?
- If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?
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Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Louis C. Gapenski
5th Edition
1567934250, 978-1567934250
