Ebv proposes to structure the investment

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Suppose EBV is considering a $5M Series A investment in Newco. EBV proposes to structure the investment as RP with APP of $4M plus 5M shares of common stock. (We refer to this basket of RP plus common as "series A") The employees of Newco have claims on 15M shares of common stock. Following the Series A investment Newco will have 20M common shares outstanding. The $100M EBV fund has annual fees of 2 percent for each of its 10 years of life and earns 20 percent carried interest on all profits with committed capital as base. Expected GVM is 2.5 and GP% = 10%.

Solve for the LP valuation equation for this investment.

A. 0.19 * (V-3/4 * C (4))

B. 0.90 * (V-1/4* C(4))

C. 0.90 * (V -3/4 * C (5))

D. 0.90 * (V - 3/4 * C(4))

Reference no: EM131554670

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