Compute the lp cost for investment, Business Economics

Suppose that EBV is considering a $5m Series A investment in Newco. EBV proposes to structure the investment as 5m shares of CP with FV of $5m, one-to-one conversion to common, and no dividends. EBV estimates the total valuation of Newco as $30m. The founders of Newco, who will continue with the firm, currently hold 15m shares of common stock. Thus following the Series A investment, Newco will have 15m common shares outstanding, with another 5m shares upon conversion of the Series A. EBV has lifetime fees of 25% and carried interest of 20%.

a)  Compute the LP cost for this investment

b)  Compute the partial valuation of this investment

c)  Divide this partial valuation into its two components: GP valuation and LP valuation

d)  Should EBV make this investment?

e)  Perform a sensitivity analysis of this investment recommendation

Posted Date: 4/3/2013 1:27:44 AM | Location : United States







Related Discussions:- Compute the lp cost for investment, Assignment Help, Ask Question on Compute the lp cost for investment, Get Answer, Expert's Help, Compute the lp cost for investment Discussions

Write discussion on Compute the lp cost for investment
Your posts are moderated
Related Questions
What is the Lewis Model? The Lewis Model argues economic growth needs structural change into the economy whereby surplus labour within traditional agricultural sector along wit

How can value management be utilized to compare various possible design solutions? When the bottom-level objectives for a project have been acknowledged through these technique

DEVELOPMENT THROUGH RESOURCE TRANSFER is explained below The chief idea here was that (as mentioned previous) poor countries suffered from the savings and foreign exchange gaps

how to decentralization aids in citizen mobility

VARIOUS DEFINITIONS OF UNEMPLOYMENT

Why does a production possibilities frontier with increasing opportunity costs have a bowed-out shape?

PRICE ED OF DOVE SOAP IS GRATER THAN BATHING SOAP IN GENERAL.. GIVE REASON. AN WHAT U ANALYIS

Is unemployment and underemployment a problem? The cost of unemployment is both: • Economic along with the opportunity cost of lost output raised poverty and inequality

How does macro-economic stabilisation assist growth? Economic agents as the consumers, private zone and overseas investors as like multi nationals make decisions based onto co

What is suitable technology? Technology is suitable when this employs methods which make the best use of accessible resources that is labour-intensive, straightforward techniqu