What is your investment recommendation

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ROSS is considering a $6M Series A investment in Newco. ROSS proposes to structure the investment as 3M shares of convertible preferred stock. The founder of Ross who will continue with the firm, currently holds 10M shares of common stock. Thus, following the Series A investment, Newco will have 10M common shares outstanding and would have 15M shares outstanding upon conversion of the CP. ROSS estimates a 25% probability for a successful exit, with an expected exit time in 3 years. What is your investment recommendation? Show calculations.

Reference no: EM13120589

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