Let's say I have five investors, each owning 20% of a company that is worth
$1,000,000. One investor wants to be bought out. So the other investors would, to maintain their equal proportion after the buyout, each pay
$50,000 and hence would now have 25% of the company.
This makes sense to me. However, when the numbers are not equal, I am unsure how to figure out how much each person would pay.
For example, let's say:
- Investor 1 owns 50%
- Investor 2 owns 20%
- Investor 3 owns 15%
- Investor 4 owns 12%
- Investor 5 owns 3%
Investor 2 wants to sell. If the company is worth
$1,000,000, how would one calculate how much each investor would have to pay Investor 2 to keep their proportionate share in the company?