Calculator
Debt or equity
The calculator finances the same amount with debt or with a capital increase. It gives the dilution avoided, the total cost of the debt and the value existing shareholders keep at the chosen horizon.
With debt
€179.90m
value kept by existing shareholders at the horizon
With an equity raise
€176.32m
value kept by existing shareholders at the horizon
Debt leaves €3.58m more to existing shareholders. Debt avoids a dilution of 20.00% and costs €10.50m of interest. It leaves more value once value grows by more than 6.19% a year.
| Item | Debt | Equity raise |
|---|---|---|
| Share of equity kept | 100.00% | 80.00% |
| Cost to existing shareholders | €10.50m | €14.08m |
| Value kept at the horizon | €179.90m | €176.32m |
The initial values are sample inputs to replace with your valuation and the terms you received. This calculation gives an order of magnitude and commits no lender or investor.
Method
The comparison formulas
In both routes, the amount raised goes into the company and the equity value after the transaction grows at the same rate until the horizon. With debt, existing shareholders keep the whole value less the borrowed principal and the interest paid. Tax and the investment of cash are left out of the calculation.
Dilution avoided
Dilution = amount raised ÷ (pre-money valuation + amount raised)
Value kept with debt
Value = (pre-money + amount) × (1 + growth)^horizon − amount − interest paid
Break-even growth
Break-even growth = (1 + interest paid ÷ amount)^(1 ÷ horizon) − 1
Example
Worked example
A company valued at €120.00m before the transaction finances €30.00m. The capital increase dilutes existing shareholders by 20.00%. The bullet debt at 7.00% costs €10.50m of interest over 5 years. With value growth of 8.00% a year, existing shareholders keep €179.90m with debt and €176.32m with the equity raise. Debt leaves more value above annual growth of 6.19%. The figures of this example are sample inputs.
Benchmarks
Valuation multiples of unlisted SMEs
| Acquirer | Median EV / EBITDA multiple |
|---|---|
| All acquirers (Argos Index) | 8.8x |
| Investment funds | 10.2x |
| Strategic acquirers | 7.9x |
Six-month rolling median of majority acquisitions in the mid-market.
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