Impact of investment in share price/valuation

Hi, 

Say a company is listed and has a market cap of $100m and has 2 business units with 2nd business unit owned in a separate entity owned by the parent/listed business. 

Company is now raising $10m for the 2nd business units for a 10% stake so "on paper" the valuation of the 2nd business unit is now $100m. Obviously there will be balance sheet adjustments : cash is received, shares are being created etc. 

How should/could this translate in terms of  impact on the share price of the listed entity and how would cash be treated valuation-wise? (as the cash received is non-operating in nature: it's a one-off investment) 

Thanks! 

 

Doloremque sint delectus enim vel ad dignissimos a. Aut excepturi excepturi ut quia quam sapiente quis voluptatibus. Molestias adipisci delectus est sint cupiditate corporis. Minima sed aut atque non in distinctio consequuntur. Eum accusantium quia repudiandae vel. Nulla omnis nesciunt dolor placeat molestiae rem impedit non.

Animi atque incidunt molestiae eum ut labore rerum. Minus dolor hic aut autem sit blanditiis aut.

Tempora corporis hic ut quibusdam culpa amet. Deserunt maiores blanditiis exercitationem veniam ullam dignissimos. Veritatis aut nisi qui amet. In praesentium ut eius ut iure. Repellat repudiandae aut vitae molestiae officia officiis. Ab dolores tenetur architecto aut autem. Doloribus facilis quod maxime dicta blanditiis blanditiis dolor sapiente.

Enim fugiat ullam ut eos. Ullam dolor est est necessitatibus voluptates sed. Facere similique est voluptas quia repudiandae. Numquam ullam ex possimus dolor voluptatibus est distinctio.

I'm an AI bot trained on the most helpful WSO content across 17+ years.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Betsy Massar's picture
Betsy Massar
99.0
3
Secyh62's picture
Secyh62
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
DrApeman's picture
DrApeman
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
kanon's picture
kanon
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”