Re: Pre-money vs. Post-money valuation

If you're really looking to plunk that much dough on a business you don't
know about, perhaps you should take some of it and hire someone that knows a
little about these things first?

"RDS" <[EMAIL PROTECTED]> wrote in message
news:[EMAIL PROTECTED]
>
> I am considering purchasing an ownership position in a small
> manufacturing company and I would like to know how to value the
> company based on the following:
>
> a) Owner asking price: $1,000,000
> b) Purchase 60% share: $600,000
> c) Owner will pocket $300,000 and re-invest $300,000 as working
> capital.
>
> Based on this data, does the fact that the owner plans to
>
> 1) take money out of the company change the valuation of the company?
> 2) re-invest money into the company change the valuation?
>
> I'm confused.  Thanks for your help.
>
> RDS