Equity % Calculation in Mixed Secondary and then Primary Transaction

Hey guys!

I am curious how you would approach equity % math in a slightly unusual sequencing of a growth equity round.

Setup:

• Pre-money: €50M
• Total investment: €10M
  • €5M Secondary or Buy-Out (investor buys existing shares at €50/share)
  • €5M Primary or Buy-In, priced off a €55M post-money (so 9.09% new shares)

Original Formula:

The secondary leg closes first, meaning that the investor buys out existing shareholders before the primary capital is wired in. No new shares are issued until after the secondary.

Normally, if you keep pricing flat (€50/share for both legs), it’s easy:
Investor ends up with 200k shares out of 1.1M → 18.18% ownership.

Alternative Formula:

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In the case I've been studying, the buyer is using the formula above, mentioning that the equity stake should actually be higher, as only the Primary is taking into consideration the Post-Money Valuation. He understands the calculations that I have described above, but say that those are just a formality. "In the end, what is fair is that he gets 19,09%".

So final % = ~19.09%, not 18.18%, due to better blended entry price.

Question:

Has anyone actually modeled or papered a deal where the secondary comes first, and the primary is post-money defined? Did you folow the Original Formula or the Alternative Formula approach?

Appreciate any insight, or examples if you’ve structured something similar.

Yes, I've used ChatGPT to draft this better :)