Adjust entry metrics for follow-on equity investments used to fund operations or acquire assets.
Module Category: M&A and Transaction Adjustments
Key Concept: When portfolio companies receive follow-on equity investments during a holding period, it changes the value creation starting point. Effective Entry metrics must represent a combination of the company’s initial capital structure at acquisition and the impact of the follow-on equity inflow. The mathematics of this combination depend on whether follow-on equity is used to acquire assets or fund company operations or growth initiatives.