Creating separate Classes for a Project will allow you to reflect the legal structure of your investment entity, and provide the ability to add relevant Debt to your project (if applicable).
NOTE: If you need to add a Class to a Capital Raise, please refer to the document: Adding a Class to a Capital Raise
STEP 1: Navigate to the relevant Project and select the Classes tab.
STEP 2: In the top right-hand corner, select + NEW button to define the following:
Class Name
Class Type: Select whether the class will be used for Debt (such as promissory notes) or Equity Positions
The Share/Unit Price (For Equity Class only)
Date (For Equity Class only): Select a date if equity pricing based on a date is needed. For example, a close date of the property.
STEP 3: For a new Equity Class, Click on the % Ownership Percentages to define the Project percentage ownership between classes. (ex. Management Class owns 30% and Limited Partner Class owns 70%) of the total Project.
STEP 4: Once created, you are ready to add the relevant investor positions or create a new distribution plan.
How Percentage Ownership is Calculated using Units in a Class and across the Classes in the Project:
In InvestNext, the Ownership Percentage in the Class is calculated using Units. The system uses the Share Units per Position and the total Share Units in the Class to determine the ownership percentages of each member in the Class. The system will treat all the Units in the Class as 100% of the Class's Units.
The system will also use the percentage ownership of each Class when calculating the overall ownership percentages for each investor. An example of this would be if the Management Class has 30% overall ownership percentage in the project and the Limited Partner Class has 70% ownership percentage in the project.
For example calculation:
If there are 9 Positions in the Management Class each with 10 Unit Shares, the system will calculate the ownership percentage for each of the Positions as shown below:
(10 Unit per Management Position / 90 Total Management Class Units) * (30% Overall Management Class Ownership Percentage) = .033 or 3.33%
3.33% is the ownership percentage for one management position in this scenario.
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