Projecting Stock-based Compensation Question
I need to project out the Stock Based Compensation for a company. Is it okay if I make it a % of Sales?? If not what is the correct method here?
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If I were you I'd project it as a % of costs (ideally comp costs if you have it) as that's how it will scale, not with revenue.
Note that if youre building an LBO you generally want to wipe SBC because you won't issue it post transaction (you will pay your execs with options / equity incentives in place of SBC which will be reflected in your dilution at exit, not in your expenses)
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