Share Valuations

Stock valuation "Evaluation of unlisted stocks is very subjective, especially if the purpose is to determine the reasonable price for the acquisition of the company or owner." In many cases private equity shares are required Therefore, stock evaluation is necessary. * Valuation including management acquisition, purchase or sale * Determination of price when the company purchases its own stock * Establishment of employee stock option and management incentive plan price * Inland income "financial" value

In order to understand mathematics, you need to change your example from the headline rating (previous or subsequent currency valuation) to the per share price (ie per share valuation). Likewise, trading and analyzing listed companies will notice earnings per share earnings per share (EPS). Although we need to consider the evaluation of each company now. To calculate how much you have venture capital, you need to split $ 2 million / $ 10 million (investment for late funds). Mathematics is easy if you do not make conversion notes. Series - The price per share is 8 million dollars (prepayment evaluation) divided by 1 million dollars (founder stock). Therefore, the price per share is 8 dollars. With this, VC owns 20% of the company and the founder will own 80% of the stock.

When considering the company's evaluation, please use the desired price per share. Common stock price is determined by evaluation of 409A. This evaluation corresponds to the employee execution price of the incentive stock option (ISO) program. This price is usually much lower than the desired price per share. As the liquidation event approaches, the price of the common stock is close to the price of the preferred stock. Preferred stock is usually made up of investors. Common is usually composed of angels, founder and start-up companies.

Economics, of course, means the evaluation of transactions, in other words the price. The price is the total number of stocks received multiplied by the price per share. I like to consider the assessment from the perspective of investment size and how much equity the venture capital receives in exchange for funds and expertise. Not that bad, but here is a very important warning and a question to ask after all entrepreneurs have received estimates. Is the evaluation of $ 20 million a prepayment or a late evaluation? This does not seem to be an important issue, but it is. Pre-financial evaluation of 20 million dollars is the same as above.