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Besserlot is currently owned 35% by its senior managers, 30% by a venture capital company, 25% by a single shareholder on the board of directors, and 10% by about 100 other private investors.
(b)Discuss how the shareholder mix of Besserlot and type of payment used might influence the success or failure of the bid.
The venture capital company will probably have invested in Besserlot with a view to making a large capital gain, possibly if Besserlot was itself to seek a listing on a stock market. Stanzial will have to offer a sum large enough to satisfy the venture capital company relative to possible alternatives such as the listing.
Question) I know you do not have Kaplan, but I could not understand the VC part. Is the model answer talking about the additional investment by VC? Coould you please elaborate on the above model answer? Thank you.
30% of Besserlot is currently owned by the venture capital company.
Stanzial is wanting to buy Besserlot and so the existing shareholders of Besserlot will have to be prepared to sell their shares to Stanzial.
The reason why the venture capital company owns 30% at the moment is probably because they invested expecting to make a large capital gain. Therefore Stanzial will probably have to offer a large amount for the VC company to be prepared to sell their shares to them.
I was confused because of “will probably have invested”. I thought they will invest additionally in the future with an expectation of IPO. Thank you very much.
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