Post Money Valuation

It is important to know which is being referred to as they are critical concepts in the valuation of any company.

Post money valuation. At any point in time post fund infusion post money valuation shows the worth of the company and that can be. Thus to calculate pre money valuation we use equation 1 as we now know the post money valuation and the investment amount. Post money valuation includes outside financing or the latest capital injection. Post money valuation is a way of expressing the value of a company after an investment has been made.

Post money valuation also known as enterprise value ev represents a company s true economic worth. Post money valuation is a company s value after new capital injections from venture capitalists or angel investors are added to its balance sheet. Pre money valuation 10mm 3mm 7mm. Determining post money valuation is generally a straightforward task.

Below is a company that has a pre money equity value of 50 million. In down rounds the post money valuation is lower than the pre money valuation. The company has one million shares outstanding so its share price is 50 00. In simple terms post money valuation is to check the value of the firm which will be after boosting the capital flow in the company.

It s an important number to consider when you re valuing a stock or intend to sell your business. Post money valuation example. The post money and pre money valuation formulas. A flat round is when the pre money valuation and the post money valuation do not change.

That is the minimum amount a buyer would have to pay for the whole business. Post money valuation means assessing the company s worth post capital injunction in the company. These valuations are used to express how much ownership external investors such as venture capitalists and angel investors receive when they make a cash injection into a company. First you can simply add the value of the investment to the pre money valuation of the company.

Now let s say a venture capital firm offers your startup company a 4mm investment at a 6mm pre money. In the examples above the series b funding was an up round investment because the post money valuation 80 million was higher than the pre money valuation 60 million. There are two standard ways to calculate the post money valuation of a company. The company below has a pre money equity valuation of 50 million.

This value is equal to the sum of the pre money valuation and the amount of new equity. Before the round of financing the company has one million shares outstanding and thus a share price of 50 00.