Talltree is considering a $12M Series B investment in Newco for 5M shares of CP with $12M

Question:

Talltree is considering a $12M Series B investment in Newco for 5M shares of CP with $12M APP. The other investors are

(1) The employees, who have claims on 10M shares of common; and

(2) EBV, the Series A investors, who have 5M shares of CP with $6M APP. In both of these structures, the Series B has a liquidation preference to Series A. All the parties agree on an estimate of $30M for the total valuation of Newco.

(a) After this round with Talltree, what are the pre- and post-money valuations for Newco?

(b) What are IVpost and IVpre?

Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....