20200429024424fin_335_in_class_exercise_2___orn.docx
Names: ____________________________________________________________________________
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Entrepreneurial Finance
In-Class Exercise 2
Outreach Networks: First Venture Round
Solution Steps
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1
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Select the appropriate comparable companies and explain your choice:
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2
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Calculate Valuation metric from the Comps that you selected:
EV/EBITDA (EBITDA ratio) =
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3
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Calculate ORN’s value at exit.
Apply comp EBITDA ratio to ORN’s projected year 6 EBITDA:
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4
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Calculate the PV of ORN by discounting the year 6 value at the VC’s required rate of return:
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5
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Calculate Series A VC’s required ownership percentage by dividing today’s cash investment by the present value:
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6
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Calculate required shares to be issued (n):
n = (Existing shares x Acquired %) / (1 – Acquired %)
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7
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Calculate total shares outstanding:
Existing Shares + New Shares =
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8
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Price per share (Investment / Shares Received) =
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9
Capitalization Table
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Shares
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%
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Founder/Management Team
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Everest Partners
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Total
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