Which time comparable companies are forecasted to be valued

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Reference no: EM131021930

John Smith, ceo of ReaseachNews inc., wants to raise $10M in Series A preferred stock from Greylock partners. Greylock partners projects that ResearchNews will reach an EBITDA of $100M in 10 years, at which time comparable companies are forecasted to be valued at 5 times EBITDA. Greylock Partners expects a 3X return on their investment.

A) What will the value of the firm be in 10 years (i.e., at exit)?

B) What is the minimum % share of the company Greylock Partners would require today to invest $10M in ResearchNews?

C) Suppose ResearchNews has 1 million shares outstanding before Greylock Partners's investment, and that Greylock Partners wants 20% ownership of ResearchNews for their investment. How many shares should Greylock Partners ask for? What is Greylock Partner's price per share?

Reference no: EM131021930

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