Session 7 Numerical

Question 1

4X to 6X Price-to-Sales multiple.
Given this, what is her projected exit value for NewVenture in 2020? How to solve

Answer 1

4X to 6X Price-to-Sales multiple x revenue expecataion

Question 2

Higher asset intensity does what to a business exit value?

Answer 2

A higher asset intensity typically reduces a business’s projected exit value because it indicates more capital tied up in assets, lowering return on investment. Investors may discount the valuation due to increased capital requirements and lower operational efficiency.

Question 3

What share of the company will she require in January 2016 if her annual required
rate of return is 50% and she anticipates an exit in December 2020 of $150 million?

Answer 3

1.5 to power of 5 times by initial investment. Then value divided by exit value

Question 4

Post money formula/pre

Answer 4

pre initial investment/post = investment divided bu share

Question 5

. Assuming she invests $5 million at the valuation calculated in Question 1(d), how much
money will she get with this security if NewVenture exits in December 2020 at a $150
million valuation?

Answer 5

5 + (share over 100 x exit value - investment)

Question 6

When there is a new round of financing what must you do to pre- money val.

Answer 6

Post - initial investment