Hi there -
I understand how we compute the fully diluted vs. treasury method price per share for a public company (assuming repurchase of shares with the proceeds of the exercice of vested and in-the-money options).
However, in the context of a private company, how would that work? See an example below.
EBITDA = $10m
Multiple = 10x
Enterprise Value = $100m
Net Debt = $50m
Equity Value = $50m
Shares outstanding = 100
Options vested and outstanding = 20
Strike Price = $250,000
So let's assume the company is being sold to an investor for $50,000,000. What would the the proceeds paid to the shareholders and the ones coming from the exercice of the options?
My first guess is the following:
The Company will receive proceeds for the exercise of the strike : 20 * $250,000 = $5,000,000
The total number of shares will grow from 100 to 120
The price per share is therefore = ($50,000,000 + $5,000,000) / (100+20) = $458,333
Shareholders will hence receive = 100 shares * $458,333 = $45,833,333
Option holders will receive = 20 options (now shares) * $458,333 = $9,166,667 minus the strike of $5,000,000, i.e. $4,166,667
Do you think the above maths are correct? Treasury Method Price per share would be $458,333?