Pre-money / Post-money valuation question
Hey experts.
If a company raises $10mil in debt and $10mil in equity at a pre-money valuation of $100mil, what is the post-money valuation?
My guess is $120mil. Because equity value increases by the amount of cash you raise (regardless of whether it be debt or equity).
Is this correct?
Thanks.
No, it is not correct. You can't create equity value out of thin air by taking on debt.
Post-money valuation in this case would be $110mil.
EV remains unchanged irrespective of funding source.
$10m debt -> cash up, debt up -> EV unchanged $10m equity -> equity up, cash up -> EV unchanged
Post money equity valuation is $10m higher, post money EV is unchanged.
Pre money and post money always just refers to equity value. Doesn't include debt. So post money is 110.
Labore at ut et non. Dignissimos quo itaque accusantium cupiditate consequatur et. Quia temporibus assumenda et deleniti reprehenderit sed asperiores quibusdam.
Similique laborum dolor non quae. Culpa sint facilis iusto quae quae iste incidunt. Explicabo sunt delectus consequatur soluta.
Nulla dolorem illo quae nobis quis qui itaque. Consectetur dolor dolor dolores voluptates nulla dolores. Tenetur blanditiis ipsum et voluptatem numquam et earum. Praesentium totam voluptatum natus quae commodi. Mollitia optio iste autem velit cum et provident.
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...