Pre-money valuation calculation - NPV of the project?
Let's say Company B is investing equity in Company A.
Company A, holding 100% of the equity stake in the company. The company has zero revenue, zero debt, etc. It has an idea of the business and looking for an equity investor. Company A's owner has contributed minimal equity in the company. The owner will not contribute any equity.
Based on the unleveredanalysis, of Company A's project is $100m ( of $60m, which is the construction cost)
To fund $60m construction cost, Company A is looking for an equity investor who can inject $50m. The remaining $10m will be sourced via debt. No convertible stuffs, just plain cash injection.
Company B invests $50m, and thinks their equity stake of this company is:
Pre-money: $100m (unlevered NPV of the project)
Equity injection by Company B: $50m
Post-money valuation: $150m
Company B's equity stake in Company A: 33.3% ($50m/$150m)
Here's my question:
- Is unlevered DCF of initial capex cash outflows and future cash inflows (aka, the unlevered NPV of the project) simply the pre-money value? (the $100m). And, does this unlevered NPV of the project of Company A?
- If not, what other factors should I look it? Should unlevered NPV "exclude" the initial capex cash outflows and only factor in future cash inflows?