Suppose VCs invested $40 million to purchase 3,000, 000 Series A Participating P

Question

Suppose VCs invested $40 million to purchase 3,000, 000 Series A Participating Preferred Shares. The Series A shares: have a 2X liquidation preference participate with common shares on an "as converted" basis (after the liquidation preference has been paid) are each convertible to 4 common shares. There arc 18,000, 000 common shares currently outstanding (and no other preferred shares). If the company was sold for $280 million, how would the funds be distributed? Circle the final payout total for each group, and show how you calculated it.

Explanation / Answer

Series A shares participate with common shares on an as converted basis ( after the liquidation preference has been paid)

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