Hi,
I’m a bit confused about the valuation behind equity raising.
How do you decide how many shares to issue and how do you decide how much each of those shares are worth? For instance if a private company is valued at £100m (company A) and they want to IPO, how much could they raise in IPO or if it was a public company how do you decide how much they could raise? and how do you decide how many shares to issue?
Thanks
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You have primary and secondary sales: are existing shareholders selling to exit or are they issuing additional shares to raise capital for the company (or debt redemption). Depends on goal of IPO.
Most IPOs sell 10-20% of the company, and you typically want to have maybe a 5-10% pricing range for $/share at open. You can do the math to back into number of shares required at a certain price given the IPO valuation and % of company sold into IPO market to get share price range.
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