City investing com liquidating
Your investor, though, won’t make any extra return at $60 million.They might want to sell now, to avoid the risk that the business drops off in the 12 months, or hold on until the valuation is above $65 million.
If the investor has a “”, then the waterfall looks like this:- Step 1: Pay the prefs $10,000,000; and- Step 2: Share out the remaining proceeds among the ords and the prefs.Because the liquidation amount is a fixed number (not a percentage), the lower the value of the liquidity event the greater the proportion of the proceeds that will go to the investor - even up to 100 percent, if the proceeds are less than the amount needed to pay the preference.The investor will also have the option to convert the prefs into ords, abandoning the liquidation preference and just taking their percentage of the proceeds.Where required, management has the skill sets to provide the property management, asset management and construction management expertise in order for our investments to realize their full potential.With certain limitations, we will invest in real estate asset categories as well as most positions throughout the capital structure.This leaves you with a waterfall along these lines:- Step 1: Pay the prefs $10,000,000;- Step 2: Share out the next $15,000,000 of proceeds among the ords and the prefs; and- Step 3: Share out the remaining proceeds among the ords.
The dead spot is $15 million higher ($25-65 million), and the investor would convert above $65 million, because there’s some participation in the second slice of $15 million.
Currently, we own a diverse group of properties, loans, securities and other real estate related assets.
For more information, please see the Our Assets section.
In the valuation article, we said that if the investor put in $5,000,000 on a pre-money valuation of $20 million (with no other shares rolled into the pre-money valuation), then the investor would end up with 20% of the company and the founder group with 80%.
If the company is sold the next day for $30 million, how much will the founders take home?
The aim of this piece is to demystify the termsheet: to explain the jargon to watch out for, and give you practical examples and resources to understand what each term might mean for your business.