How does cash injection post-acquisition affect the cap table?

by a searcher from Harvard University - Harvard Business School

3 years ago

Suppose I close a deal, and a year into operation, need additional cash for capex or opex. If my investors supply the cash, will the equity split be recalculated accordingly? What if I inject the cash or get a bank loan? I'm trying to understand what happens to the cap table in these different scenarios.

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searcher from The University of Chicago - Booth School of Business

The business should be valued quarterly. If additional cash is injected, it'd be valued as an investment in the company at that time. However, it should be written in you LPA ahead of the deal how additional investments will be treated, as well as the valuation methodology.

3 years ago | like reply | 1 like

searcher from Henley Business School

Agreed. SHA might play a key role with this.

3 years ago | like reply | 1 like

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