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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%