Hello,
Can someone explain the theory behind the formula for cash out from mgmt options in the basic lbo model examples. The calculation is "new equity * [(mgmt %) / (1+mgmt%)]". Why do you need to divide by (1+mgmt%)?
| +96 | Cognitive decline | 33 | 41m |
| +88 | Vibe-Working in Finance with AI ? What about you | 34 | 2d |
| +45 | PE VP: Thoughts on Quitting with Nothing Lined Up? | 16 | 47m |
| +21 | Those unemployed in PE 3+ months, how do you make progress every day? | 4 | 14m |
| +17 | Is buyside worth it if most associate programs are 2 and out? | 4 | 6d |
| +13 | How Cooked is Software PE? | 1 | 4d |
| +12 | Is it possible to get no comments as an analyst? | 2 | 3h |
| +12 | Indian PE Landscape | 2 | 3d |
| +12 | co-investment / Allocator roles WLB | 4 | 14h |
| +11 | LMM Startup PE Fund Vs. Tier 2 Consulting Firm | 3 | 4d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
TSM
The options were exercised and thus created more shares. The new number of total shares is captured by (1+mgmt%).
Occaecati voluptas illum ducimus culpa. Et consequatur consequatur inventore veritatis sit.
Ullam officia harum repellat labore expedita. Voluptate est quae quisquam consequuntur iure sunt ipsum. Tenetur rerum nulla sit incidunt nisi doloribus iusto id.
Dolores commodi fuga libero sed. Error nihil quam quis neque.
Qui sit facilis quasi exercitationem nostrum voluptatibus et. Minus impedit officia alias provident similique. Voluptatem odit distinctio numquam inventore. Sint quia sit ut neque voluptatem amet ex.
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...