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Started By
Message
Investing in Private Equity.
Posted on 5/11/24 at 3:03 pm
Posted on 5/11/24 at 3:03 pm
So I’ve got a question on how some of this private equity pay out works. Let’s say you go to work for a company that is majority owned by a PE firm and you get shares valued at $1.00 and the company is doing around 30 mil in revenue. You also buy in with additional investment money so total shares are 500k at $1.00 per.
I know there’s a shite ton of factors involved but what would the shares be worth if the company was doing 60 mil in year two and 150 mil in year 5? Year 5 would be the year to cash out or reinvest with the PE if they choose to do another 5 years.
I know there’s a shite ton of factors involved but what would the shares be worth if the company was doing 60 mil in year two and 150 mil in year 5? Year 5 would be the year to cash out or reinvest with the PE if they choose to do another 5 years.
This post was edited on 5/11/24 at 3:05 pm
3
Posted on 5/11/24 at 6:50 pm to Rize
Probably B shares and waterfalls are extremely complicated. You’re at the mercy of the PE firm and your CEO’s ability to negotiate. Do you know what percentage of the company your shares make up?
Posted on 5/11/24 at 6:51 pm to JL
Very small amount. Like 1% or less.
And I have two types of shares.
And I have two types of shares.
This post was edited on 5/11/24 at 6:52 pm
Posted on 5/11/24 at 7:33 pm to Rize
Rule of thumb is 2.5x cash flow is the value of the company. 150mm x 2.5 x 1%= your stake in a fair world. World isn’t fair.
Posted on 5/11/24 at 8:25 pm to Rize
- Do you own common shares or are you part of a mgmt. option pool?
- What type of company?
- What is the current EBITDA?
- Do you know how much leverage is on the business? Current amounts of cash and debt?
Can also connect offline if you don't want to share here. I work in IB and can build you a rough waterfall, but need more data to even get close to a realistic number.
- What type of company?
- What is the current EBITDA?
- Do you know how much leverage is on the business? Current amounts of cash and debt?
Can also connect offline if you don't want to share here. I work in IB and can build you a rough waterfall, but need more data to even get close to a realistic number.
Posted on 5/11/24 at 10:24 pm to Azazello
Do you own common shares or are you part of a mgmt. option pool? - Both. Around 75% was given(400k) on accepting job and we are investing the rest which is 125k.
What type of company? Don’t want to put that out there but can email you.
What is the current EBITDA? Not known
- Do you know how much leverage is on the business? Not known
Current amounts of cash and debt? No debt not sure on cash.
Can also connect offline if you don't want to share here. I work in IB and can build you a rough waterfall, but need more data to even get close to a realistic number.[/quote]
What type of company? Don’t want to put that out there but can email you.
What is the current EBITDA? Not known
- Do you know how much leverage is on the business? Not known
Current amounts of cash and debt? No debt not sure on cash.
Can also connect offline if you don't want to share here. I work in IB and can build you a rough waterfall, but need more data to even get close to a realistic number.[/quote]
Posted on 5/12/24 at 9:34 am to Rize
azazello996 at gmail
Posted on 5/12/24 at 9:38 am to CheesyF
Don’t they have a bunch of different types of shared and only the big money investors actually get the ones that you would want?
Posted on 5/12/24 at 9:51 am to GeauxTigers123
Yes. A shares get priority then waterfall down based on what they decide the rest should get.
Posted on 5/12/24 at 10:40 am to Azazello
Sent
Posted on 5/12/24 at 10:57 am to Rize
Ultimately, the shares are worth whatever someone will pay for them.
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