Private Equity Placement - Summary
Demo Company
Private Equity Scenario #1a-1
(Dollars and Shares in Thousands, Except Per Share Amounts)
| 1. Executive Summary: | ||||||
| A. Member's assumptions: | ||||||
| The dollar amount of financing desired: | ||||||
| Common Stock | $1,000 | |||||
| Preferred Stock | $0 | |||||
| Subordinated Debt | $4,000 | |||||
| The annual rate of return on investment (ROR) objective of the "new issue" common stock and preferred stock investor(s) | 38.0% | |||||
| The annual rate of return investment (ROR) objective of the "new issue" subordinated debt investor(s) | 22.0% | |||||
| The EBITDA multiple used to determine the gross value of the business four years after the financing | 8.0 | |||||
| B. Results: | ||||||
| The estimated value of the company immediately before the financing ("pre-money value") | $15,509 | |||||
| The estimated fully diluted ownership percents of investors immediately after the financing | ||||||
| Original equity investors (assumes 100% ownership before the financing) | 90.1% | |||||
| New issue common stock investors | 5.9% | |||||
| New issue preferred stock investors | 0.0% | |||||
| New issue subordinated debt investors (warrants) | 4.0% | |||||
| Total fully diluted ownership interests after the financing | 100.0% | |||||
| The computed annual rates of return on investments (ROR) during four years after the financing | ||||||
| Original equity investors | 38.0% | |||||
| New issue common stock investors | 38.0% | |||||
| New issue preferred stock investors | 0.0% | |||||
| New issue subordinated debt investors | 22.0% | |||||
| 2. The Deal: | ||||||
| A. Pre-money value of the company at the end of the first forecast year | ||||||
| Gross value of the company's assets at the end of the first forecast year | $40,773 | |||||
| Company's liabilities at the end of the first forecast year | (25,264) | |||||
| Pre-money value of the company at the end of the first forecast year | $15,509 | |||||
| Company's forecast of year one operating earnings | $5,514 | |||||
| Company's forecast of year one EBITDA | $7,416 | |||||
| Gross value of the company, divided by forecasted year one operating earnings | 7.4 | |||||
| Gross value of the company, divided by forecasted year one EBITDA | 5.5 | |||||
| B. Estimated value of the company immediately after the financing ("post-money value") | ||||||
| Pre-money value of the company at the end of the first forecast year | $15,509 | |||||
| Gross amount of common stock financing | $1,000 | |||||
| Gross amount of preferred stock financing | $0 | |||||
| Gross amount of subordinated debt financing | NA | |||||
| Financing fees | $(260) | |||||
| Post-money value of the company at the end of the first forecast year | $16,249 | |||||
| 3. Investors' Outcome: | ||||||
| A. Company's net proceeds from financing | ||||||
| Gross amount of common stock financing | $1,000 | |||||
| Gross amount of preferred stock financing | $0 | |||||
| Gross amount of subordinated debt financing | $4,000 | |||||
| Gross financing proceeds to company | $5,000 | |||||
| Estimated financing fees - common stock | (60) | |||||
| Estimated financing fees - preferred stock | 0 | |||||
| Estimated financing fees - subordinated debt | (200) | |||||
| Company's proceeds from financing | $4,740 | |||||
| B. Company's sources and uses of funds at time of the financing | ||||||
| Sources of funds: | ||||||
| Common stock financing | $1,000 | |||||
| Preferred stock financing | $0 | |||||
| Subordinated debt financing | $4,000 | |||||
| $5,000 | ||||||
| Uses of funds: | ||||||
| Working capital | $4,740 | |||||
| Financing fees | $260 | |||||
| $5,000 | ||||||
| C. Company's interest rate on subordinated debt | 12.0% | |||||
| D. Company's subordinated debt repayment requirements | ||||||
| Company's current maturities of subordinated debt: | ||||||
| Beginning of "post-money" year 1 | $0 | |||||
| End of "post-money" year 1 | $0 | |||||
| End of "post-money" year 2 | $0 | |||||
| End of "post-money" year 3 | $0 | |||||
| End of "post-money" year 4 | $0 | |||||
| E. Gross value of the company's assets four years after the financing | $82,984 | |||||
| Company's forecast of operating earnings | $8,471 | |||||
| Company's forecast of EBITDA | $10,373 | |||||
| Gross value, divided by forecasted year four operating earnings | 9.8 | |||||
| Gross value, divided by forecasted year four EBITDA | 8.0 | |||||
| F. Net value of the company's assets four years after the financing | ||||||
| Gross value of the company's assets | $82,984 | |||||
| Liabilities of the company | 21,612 | |||||
| Net value of the company's assets four years after the financing | $61,372 | |||||
| G. Equity investors' pretax return on investment four years after the financing | ||||||
| Original equity investors: | ||||||
| Value of investment immediately after the financing | $15,249 | |||||
| Fully diluted ownership percent immediately after the financing | 90.1% | |||||
| Value of investment four years after the financing | $55,282 | |||||
| Pretax annual rate of return on investment (four years) | 38.0% | |||||
| New issue common stock investors: | ||||||
| Value of the investment immediately after the financing | $1,000 | |||||
| Fully diluted ownership percent immediately after the financing | 5.9% | |||||
| Value of investment four years after the financing | $3,622 | |||||
| Pretax annual rate of return on investment (four years) | 38.0% | |||||
| New issue preferred stock investors: | ||||||
| Value of investment immediately after the financing | $0 | |||||
| Fully diluted ownership percent immediately after the financing | 0.0% | |||||
| Value of investment four years after the financing | $0 | |||||
| Pretax annual rate of return on investment (four years) | 0.0% | |||||
| H. Subordinated debt investors' pretax return on investment four years after the financing | ||||||
| Equity investment immediately after the financing | NA | |||||
| Fully diluted ownership percent immediately after the financing | 4.0% | |||||
| Value of equity warrants four years after the financing | $2,464 | |||||
| Pretax annual rate of return on investment (four years) | 22.0% | |||||