How do I value price per share to issue ?
My company wants to issue new shares to develop new projects.
I forecast the FCFF (free cash flow to firm) including new projects's cash flow then discount to present. EV =$500
no debt now
Equity value = $500
So I want to calculate price per share to issue new share.
Outstanding shares: 100. Issue 10% : 10.
Equity value $500 divide number of outstanding shares (100) or after issuing shares (110) ???
The question is really are you raising $ (primary capital), or just diluting to bring on other early employees, etc.
Assuming the former:
$500 pre-money EqV / 100 shares =$5 pre-money share price
10 shares issued * $5 = $50 new EqV
Post-money share price = $550 / 100 = still $5.
Assuming the latter:
$500 (pre- and post-money, since no money) EqV / 110 shares = ~$4.5
Illum et perferendis nihil dolor omnis tempore iste et. Consequatur aspernatur quia sint omnis libero placeat.
Eligendi sequi quod sunt aspernatur assumenda rem. Quaerat quibusdam magni dignissimos. Odit consequatur fuga qui aliquam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...