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Hello sir,
In part B answer in bpp it says” private equity investors are likely to be willing to pay a premium for the benefits of control (control premium) – often as much as 30% – 50% of the share price. In this case negotiations may start at a share price of $16.62($11.08*1.5)”. How did they arrive at 1.5?
Thank you
Multiplying by 1.5 is the same as adding on 50%.
There is no special reason for adding on as much as 50% – it is simply important to make the point that private equity investors are likely to pay more for the reason stated above.
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