Your firm wants to acquire Gamma Company. Gamma is a privately held firm with no debt, and a majority shareholder who owns 51% of the shares of this company. All shares are illiquid. The firm has a discounted cash flow valuation of $180M, and there are 15M shares outstanding. You plan to offer the majority shareholder a higher price than the minority shareholders. You believe a 20% control premium and a 30% illiquidity discount are justified, relative to the base case valuation.

a. What is the value per share, assuming completely liquid stock and dispersed ownership?

b. What is the value of the controlling block of equity?

c. What is the highest price per share you could offer for the controlling equity?

d. What is the value of the minority block of equity?

e. What is the highest price per share you could offer for the minority equity?