What percentage of the firm will you own after the ipo

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It is currently 2011 and you need to raise additional capital to expand your business. You have decided to take your firm public through an IPO. You would like to issue an additional 6.5 million shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2011 net income will be $7.5 million.

a. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ratios based on 2011 forecasted earnings average 20.0. Assuming that your IPO is set at a price that implies a similar multiple, what will your IPO price per share be?

b. What percentage of the firm will you own after the IPO?

Reference no: EM132654520

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