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.
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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.
Thanks everyone!
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