If a company is planning to IPO 15% of their company and they currently have 200 shares outstanding, what would be the formula to calculate the number of shares issued?
I thought it would be: (Current Shares outstanding * %IPO)
but the actual formula is:
(Current Shares outstanding * %IPO) / (1 - %IPO)
Why are we dividing by (1-Percent IPO) ?
| +56 | Should I Leave ~$280K Corp Dev for PE? | 31 | 16h |
| +48 | How much is enough? | 26 | 1d |
| +38 | Does this mean I am not cut out for PE? | 8 | 1d |
| +20 | How to Secure Higher Carry Award Before Promotion | 2 | 1d |
| +19 | Carried Interest Tax Question | 3 | 2d |
| +18 | I Don't Wanna Go To PE Anymore | 4 | 3d |
| +14 | Generalist MFPE tech (KKR / BX) vs >$10B pure play tech (FP / HG) | 1 | 5d |
| +10 | US PE alpha look abysmal in L5Y | 3 | 5d |
| +9 | H.I.G GP Solutions / Secondaries Team | 1 | 2d |
| +6 | Stepstone PE Modeling Test | 2 | 2h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
That formula still looks wrong. It should be Current Shares / (1 - IPO %), the idea being that you want your current shares to = 85% of the total shares outstanding post-IPO.
If "owned shares" = 85% post-IPO, then Total Post-IPO Shares * 85% = Owned Shares, divide both sides by 85%, and you get Total Post-IPO Shares = Owned Shares / 85%. Then Just do Total Post-IPO Shares - Owned Shares to get Shares Issued
Doloremque beatae sit et dolores repellendus. Officia quibusdam et est est velit voluptates blanditiis. Sint voluptate architecto aut corporis saepe et. Laboriosam deserunt rerum ratione consequatur ratione.
Est dolorem distinctio in aspernatur molestiae eveniet ut. Et neque ullam cumque beatae veritatis at sit. Rem sunt incidunt quisquam unde eum quia saepe. Voluptatem ex a voluptatem voluptates.
A qui ea ea amet. Omnis aut rem a magnam. Deserunt sequi eos ut laborum adipisci earum. Non omnis qui reprehenderit aut facilis.
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...