The founder of a company currently holds 12 million of the 15 million shares in that company. She considers an IPO where she sells a mix of primary shares and 2 million of her own secondary shares for $16 per share. If she wants to retain a 70% ownership of the company, how much money can she raise in this IPO?

Question

Quizplus · Accepted Answer

D) 70% of 15 million shares = 0.7 × 15 million shares = 10.5 million shares;
Thus, the founder can sell 12 million - 10.5 million = 1.5 million shares;
The amount of money the owner can raise = 1.5 million × $16 = $24 million

The Founder of a Company Currently Holds 12 Million of the 15