The founders and owners of a private company have funded it through the following rounds of investment: The owners decide to take the company public through an IPO, issuing 1 million new shares. Assuming that they successfully complete the IPO, the net income for the next year is estimated to be $6 million. The price of shares is set using average price-earnings ratios for similar businesses of 15. What portion of the company will be owned by the angel investor after the IPO?

Question

The founders and owners of a private company have funded it through the following rounds of investment:  The owners decide to take the company public through an IPO, issuing 1 million new shares. Assuming that they successfully complete the IPO, the net income for the next year is estimated to be $6 million. The price of shares is set using average price-earnings ratios for similar businesses of 15. What portion of the company will be owned by the angel investor after the IPO?

Quizplus · Accepted Answer

B) 11ea84dc_f51f_9336_9a63_7f96c3a9bb93_TB1316_00_TB1316_00 angel investor = 0.225 million / 1.675 million = 13%

The Founders and Owners of a Private Company Have Funded