Assuming the EV at exit is 100m. Investor A was a series A investor with preferred equity of 50m, and has the rights to 1.0x its original preferred equity upon exit in addition to pro rata of remaining proceeds.
Assuming also zero net debt, so in computing proceeds at exit:
Equity proceeds = 100m - 50m = 50m Returns to Investor A = 50m (1.0x pref) + (50-50)m*% ownership = 50m (i.e. just the 1.0x)?
Looks off to me, someone please enlighten where I went wrong?
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Think the error is in the remainin 50m of value: you give 0 of that to the investor, why? It should be 50*% ownership, not (50-50) I believe?
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