So I'm in final rounds for a GE firm, and one thing has been bothering me. I've a few years of M&A modeling under my belt at this point, but I am uncertain how to model for a non-control investment. It seems to me like part of the case that I was given is...simply wrong.
To start, some background: I was given past 1 year of balance sheet, 3 of IS, full cap table, no previous CFS. SaaS company. I'm writing a memo about the validity of a C raise.
The issue is on the preferred equity: It's hardcoded, and appears to be wrong. Historical doesn't match the sum of investments from the Seed, A, or B rounds; only matches (A+B+C)-Initial Pre Money Valuation, but the C hasn't happened yet. Unclear how this came about.
Right now I have the Series C being added...on top of what is apparently already a logging of a series C investment, but of course if I were to take it out, then I'd need to take out some assets as well, and they don't have nearly enough cash historically.
What could be the issue here? Do rounds get marked as part of preferred before they're raised...? That doesn't seem right, but I am hesitant to ask them if they've made a mistake.
Advice?
Hi Roundaboot, any of these discussions helpful:
You're welcome.
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