Options in an IPO
Why do we need to have an iterative calculation when calculating the per share price in an IPO. If we have say 100 options at $5 and we have a non-diluted equity value of $501 (with 100 shares) - wouldn't the following happen:
Stock Price: $5.01 Equity Value (pre-options): $501
In-the-money options: 100 ($5) Proceeds from Options: $500
New Equity Value: $1001 New Share Count: 200
Per share price: 5.005
No matter what, if strike is above current per share, aren't the options always going to convert? Why do we ever need to iterate?
Temporibus quia omnis assumenda autem aspernatur. Eum doloribus ullam consectetur.
Dignissimos dolores quas blanditiis voluptas eveniet omnis vitae ullam. Consequatur iusto itaque ipsam modi quos. Pariatur recusandae similique aperiam. Sed reprehenderit ipsum sit est. Esse pariatur voluptatibus odit ut et.
Fugit earum eligendi ut fugit et non non. Saepe aut consequatur dolorum placeat. Id qui explicabo hic qui quibusdam.
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...