Shuman Wolf Is Interested in Investing in a Private Company

question 54

Multiple Choice

Shuman Wolf is interested in investing in a private company. Based on earnings multiples of similar publicly traded firms, he estimates the value of the private company's stock to be $20 per share. He plans to acquire a majority of the shares in the company. The expected control premium is 9 percent. Shuman estimates the marketability discount for such a firm to be 11 percent. The discount for the key person, one of the founders who may leave the firm upon Shuman's control of the firm, is 19 percent. What price should he be willing to pay for these shares? (Round final answer to two decimal places.)

• A) $16.47 per share
• B) $31.45 per share
• C) $15.72 per share
• D) $32.94 per share

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Definitions:

Formal Mentoring

A structured, often organizationally sanctioned, relationship where a more experienced individual provides guidance and support to a less experienced mentee.

360-degree Feedback

A comprehensive feedback system where employees receive confidential, anonymous feedback from the people who work around them, including peers, managers, and direct reports.

Multi-rater Feedback

An assessment tool that involves collecting performance evaluations from multiple sources, such as peers, supervisors, and subordinates.

High-visibility Assignments

Tasks or projects that are highly noticeable within an organization and have a significant impact on an individual's career development.