Question which I am pretty sure I have right but want to reconfirm / understand if there is any grey zone.
Company has 5,000 shares and agrees to a cash out / cash in deal with a PE fund @ an equity valuation of $20m cash in / $15m cash out
$1m cash in and $1m cash out.
Is the order of this transaction as following?:
-
PE fund acquires 333 shares @ $3000 a share
-
250 new shares issued which fund acquires @ $4000 per share
New shareholding:
Principals - 4,667 shares (88.9%)
PE fund - 583 shares (11.1%)
Total shares = 5,250
The point thats throwing me off is would the cash out shares be purchased after new shares are issued or before? / is this traditionally a point of negotiation with the PE firm
Many thanks in advance!
