Facebook IPO Did Not Make Bono a Billionaire

Before yesterday’s IPO, there was much speculation that based on his involvement with the investment equity firm, Elevation Partners (Bono is a co-founder and managing director), that Bono would reap a windfall of $1.5 billion or so.  He would like to set the record straight.

Yes, he made some money yesterday, could be as little as $4.4 million or as high as $10 million.  Here’s why:

1.  The $1.5 billion figure would have only been realized had Elevation sold all its shares after the IPO. They didn’t.  They unloaded only 11.5% of what they owned, keeping the rest.

2.  Bono is just one of seven managing partners at Elevation.  Profits have to be divided seven ways.

Diving deeper, here’s what happened:

Elevation made it very clear that as part of the IPO they were going to sell 4.62 million of its 44.7 million shares.  Those shares had been acquired at an average price of $4.69 per share, or $210 million.

At roughly $38 a share, the gross on the sale of those 4.62 million shares was $175,654,000.  The net on that was $159,954,000.

After paying out money owed to their clients (Elevation invests money on behalf of other people, too), the company’s total profit on the day was more like $31 million.  

Dividing things up based on the Elevation’s partner structure, Bono could have earned as little as $4.4 million (if things were divided equally seven ways) or as much as $10 million (if he has some kind of extra seniority).

If you’re a numbers wonk and you want to learn even more, go here.