So my associate has asked me to come up with a table explaining, as he puts it, "pro forma security ownership" following a blended (cash/stock/debt) stock purchase for a merger, with all outstanding debt refinanced after the transaction closes. I've never once heard this term before - isn't it just the case that the stock of the target is bought, options/notes cashed out if they meet the price points, and then debt becomes the onus of the buyer? Am I missing something here? This is for a public company, and he wants it specifically by security type, not actually named investors. Checked around, no one else has heard of this either, nor can I find anything online at all. Any ideas?
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If the buyer is issuing shares to buy the target, maybe he wants to see the pro forma % ownership of the company (ie, buyer shareholders own X% of the pro forma company and target shareholders own 1-X%). Obviously if it’s paid all in cash, the buyer shareholders will collectively own 100% of the pro forma company
See, that's what I figured, but that he wants it "by security" is throwing me. Since this deal will likely end up being cash + stock + debt, and both buyer and seller have the whole gamut of security types (options, RSUs, preferred, convertible notes, common), it's a little up in the air.
For instance, for common holders from the seller, I'm guessing that I can give them [some exchange ratio of buyer stock + a portion of the cash (from cash on hand+debt raised)] as split up from the equity purchase price - so whatever of the equity purchase price I'm unable to capture with the cash (from cash on hand + debt raised), I then exchange for buyer shares. Essentially, each common seller gets some amount of cash plus some amount of buyer stock.
That's common, and I'm uncertain enough about that. When it gets to: * options (vested I know; convert to common, use TSM, but unvested just...becomes worthless?) * preferred (treat as common...?) * convertible notes (common if vests, take on as debt otherwise...?) * and RSUs (no idea)
Then I'm a little more confused.
Not to be a dick, but why not jut ask him for more details on what he wants? He's an Associate, you're allowed to "bother" him, especially if he's vague/unclear.
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