Ever the risk taker, Max has invested in another of Sam’s companies. This time, he pays $3 million for 30 percent of SpecialStuff (SS). Calculate the payout table and draw the graphs for Sam and Max in the following situations:
a. The deal is structured as all-common, and PredatoryPurchaser (PP) offers Sam $3.5 million for the company.
b. The deal is structured as redeemable preferred with cheap common, and PredatoryPurchaser offers Sam $3.5 million for the company.
c. The deal is structured as convertible preferred, and PredatoryPurchaser offers Sam $5 million for the company. At what price will Max convert to common?
d. SpecialStuff goes public at a valuation of $20 million, and Max owns participating convertible preferred.
e. OtherStuff, a private company, buys SpecialStuff for $7 million. Max owns participating convertible preferred.