Calculate the post-ipo market capitalization

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Reference no: EM134025398

Problem

NovaTech Robotics is an automation startup founded three years ago by CEO Elena Voss who invested £150,000. A venture capital firm (VC1) contributed £250,000 at founding. Two years ago, after proof-of-concept, the firm was valued at £800,000 (pre-money) and a second VC (VC2) invested £320,000. One year ago, following a major contract win, the firm was valued at £2.4 million (pre- money) and VC1 made a follow-on investment of £600,000.

1. Calculate the current ownership percentages of Elena Voss, VC1, and VC2. Get the instant assignment help.

2. NovaTech now plans an IPO. The company has 12 million shares outstanding. Current post-tax earnings is £9.6 million and the industry PE is 12x. The firm requires £24 million in net proceeds. Flotation costs are 6% of gross proceeds. Assuming the firm decides to set its IPO price in line with the industry PE... (a) Calculate the post-IPO market capitalization. (b) Determine the offer price per share and new shares issued.

3. Suppose the IPO is priced at £8.50 per share. Calculate: The number of shares that must be sold to raise required gross proceeds.

Reference no: EM134025398

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