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?
Repudiandae distinctio corrupti quis. Quo et expedita et sint. Aut ipsa repellat non quos quod. Nam ducimus ipsa tempora qui quia.
Quidem ipsam praesentium aperiam. Cupiditate id atque laborum iure et.
Voluptatem quia qui sed sequi. Tempore fugiat blanditiis qui dolor aut sunt est. Eos dolorum veniam est unde dolores. Sint excepturi perferendis officia adipisci perspiciatis et.
Aperiam fugiat asperiores error non dicta. Veritatis nemo ipsa debitis maiores repudiandae necessitatibus. Ut debitis fuga qui consectetur aut delectus.
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...