Suppose three engineers come to you with a plan for a disruptive, yet-to-be developed software program that seems compelling.They are asking for $10 million, the amount they think they will need over the next three years to reach cash flow positive.They have a pitch deck that includes a proposed deal.They are offering you 25% of the company.The founders own the remaining 75%.You will buy common stock, and are entitled to one of four seats on the board of directors; they hold the other three seats.One slide in the deck contains a detailed prediction of the value of the company.If you invest $10 million, you will own shares that are worth at least $50 million at the end of the third year.

Twelve months after you wire the $10 million, the CEO calls.The company is progressing nicely but Oracle has offered to buy it for $20 million.They intend to pay your firm $5.0 million in cash. The founders will be paid $15.0 million immediately for their shares and each founder has the potential to receive a $5.0 million bonus after one year." The founders have decided to accept the offer.

What valuation was paid in the acquisition?Why did Oracle structure the deal with a separate bonus for the founders?