VALUATION EXERCISE- BUILDING A CAP TABLE

Building a full cap table from a limited amount of information can seem daunting. But the process of building a cap table is very similar to solving a SuDoku puzzle. You have a grid of data points (numbers) to fill in, and you are given a few numbers to start with. From the information you have, think about what data point(s) you can fill in next. Continue, filling in one box at a time until all boxes are full. Using the logic from the preceding paragraph, develop a cap table on the following assumptions – A Series B investor will invest $5 million on a $20 million post-money valuation. Existing founders & management have 15 million shares; Series A Investors have 10 million shares.What will the full cap table look like after the Series B investment?

In developing your cap table, use the following process: 1) Create a worksheet with the column headings shown below and list all of the “players” down the left side, 2) enter all known information, 3) calculate ownership % for new investors, 4) allocate pre-money value to existing investors, 5) calculate the price per share (if the price is not the same for all shareholders, something is amiss), 6) calculate the number of shares for the new investor, 7) add the total shares for all investors, 8) calculate the ownership % for existing investors. Be sure to show all your work to the extent possible to enable you to not be penalized for errors that may carry through the model.

Players# of Shares% OwnershipPrice Per Share$ Value NOTE: IF YOU FOLLOW THE STEP BY STEP PROCESS ABOVE, THIS IS A SIMPLE EXERCISE. MOST STUDENTS WHO DO NOT GET FULL MARKS FOR THIS ASSIGNMENT DO NOT FOLLOW THE SEVEN (7) STEPS LISTED ABOVE. DON’T MAKE THAT MISTAKE.

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    15-ValuationBasics.pdf
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    16-KeyFactorsInfluencingValuation.pdf
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    17-ValuationMethods.pdf