In this workout, we're being asked to calculate ownership. Post IPO we're told that Nanotech owns X Tech. And Nanotech is choosing to do a combined offering of primary and secondary shares. As per the below assumptions we're being asked to calculate X Tech's equity value and nanotech percentage ownership post the IPO.

Now, there's a couple of things to point out here, and they surround the primary and the secondary share sale. When we're looking at the secondary shares, they won't impact the total share count of X Tech. Nanotech is just taking some shares that already exists and it's selling them onto a different owner. But the total number of shares won't change based on the secondary shares, the primary shares, however, this is exec issuing brands, new shares, and that will increase the share counts.

But both of these will have a dilutive effect on nanotech ownership. The secondary shares will nanotech selling them. So nanotech is reducing its ownership and the primary share issuance, that's X Tech issuing brand new shares. So nanotech will own even less of the company. So both of these things will be dilutive to nanotech ownership.

Okay, we've got some extra information. We've got X texts valuation, pre IPO, and the number of shares. We'll be able to work out X texts share price prior to the IPO, or at least their share value prior to the IPO Nanotech are selling 20% in the secondary issuance. And in terms of this primary issuance, they want to target 100 of proceeds. So the first thing we need to do pre IPO is we take the value of XX equity divide by their shares outstanding to find the value per share pre IPO. So that's gonna be the 500 divided by the 30.

And that will give us a pre IPO share value of 16.7. Now that's useful because the new shares that are going to be issued to get hold of that 100 extra proceeds, they will have to be issued at that 16.7. Otherwise current shareholders are gonna be what? You can't do this to us. Why on earth would I let someone else invest at a lower price than I've invested in? So the new shares issued is going to be the 100 of proceeds that we're looking to raise divided by the 16.7 per share. There's going to be six new shares issued.

So what's gonna be the total number of shares post IPO? It's gonna be 36, we had 30 before. We add on the six, we got 36 in total. And if each of those 36 shares is worth 16.7, I can work out my post IPO equity value and it comes to 600. So that was our first requirements. Work out XX post IPO, equity value. We've got it. It's 600, but we also need to work out nanotech ownership. So how many shares are existing? Well, we've got The secondary shares that have been sold by nanotech, and we know that that's going to be 20% times by the 30 shares. They're selling off 20% of their shareholding. They sell off six. We also know the number of primary shares being issued. That was also six. And how many does nanotech now own? Well, they used to own 30, but we know they've sold off the six from the secondary proceeds. So they own 24. So in total there are 36 shares. Nanotech only owns 24 of them. So their new ownership stake 24 divided by 36 make percentage.

They own two thirds of the shares.