Help! Class A / Class B Shares
Hoping someone can help me out with this...
What share price do you use for a company that has two classes of shares that trade separately? Would you use the weighted average share price in your transaction math?
Thanks!
What's the difference? Voting rights? If both have the same economic rights, would probably go with the higher price to base your premium off ofr and assume both will be paid the same offer value per share; if you're just trying to get to enterprise value, just calculate the FDSO for each and multiply the share price of each.
Yep same economic rights. Do relative size of shares outstanding or holder type matter? Class B shares make up 90% of shares outstanding and it looks like Class A is mostly held by insiders, would Class B be the right share price to reflect here?
Find out what differntiates the two classes, must be something (probably votig rights for family members?). In addition check free float of the shares to see if they both are liquid enough to establish an efficient market price.
Ok thanks so much. Class A has greater voting rights per share but 85+% is held by insiders.
I'm mostly confused because I'm looking at a book that a team put together last year for this company and they used the Class B share price to calculate the entire market cap. I'm curious if this is a judgement call you would make given that most of the other Class A is held by insiders or something like that, so I know how to approach this situation going forward.
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