Valuation

-Earning multiples

-Berkus

-Market comparables

-DCF

-Venture Capital method

-Valuing the startup based on its earnings or revenue —> P/E-Ratio

-Annual revenue of $10 million and P/E of 3 —> Valuation of $30 million

-P/E-Ratio —> market price ($100) per share and EPS ($10) —> P/E = 10

-Comparing P/E to comparables (15) —> Overvalued (20) or undervalued (10)

-Based on value of company’s assets – liabilities

-Calculate the value of the company´s assets (tangible & intangible)

-Substract liabilities from asset value —> net asset value

-Pro: objective value of company based value of its assets

-Con: doesn’t account future earning power or growth

—> Use in conjuction with others

-Comparing startup to similar companies that have been required —> reference point

-Comparables should be similar in size, industry and other relevant characteristics

-Use comparable stock price to determine value of own company

-Pro: accounts current market conditions and the willingness of buyer to pay

-Con: difficult to find large enough comparable group

—> Use in conjuction with others

-Method involves projecting startup’s future cash flows and then discounting them back to present value

-Forecast the future Cash Flows

-Determine discount rate

-Calculate the present value of the future cash flows

-Substract the liabilities

-Pro: Visualization of the company cash flows

-Con: relies on number of assumption

—> Use in conjuction with others

-Early-stage startup valuation —> without revenues or profits

-Estimating startups potential future value & apply discount for risk-level

-Determine the liquidation preference —> multiple return for VC before other investors

-Determine expected return

-Calculate the company’s value

-Pro: useful valuation for startups without profits

-Con: assumptions that can be falsely changing

—> Use in conjuction with others

-Book Value

-Equity Value

-Enterprise Value

-Liquidation Value

-DCF

-Terminal Value

Per share value —> Assets - Liabilities —> NAV

Value of an ownership interest in a company —> represented by stock value

Value of business —> Equity and debt

Value of assets if company gets out of business & assets are sold

-Value by projecting monetary benefits that will be generated

-Discounted to present value

Value of business beyond the forecasted period when FCF can be estimated

-Assessment of target & volatility of CF

-Riskier investment —> higher Discount rate —> lower present value of CF

-Risks: Investment & interest rate

-Target has different risk profile than acquirer

-Analysis of capital costs —> consider components of capital mix

-Average cost for borrowing & selling equity

-Low WACC: healthy business that attract investors at low cost

-High WACC: business is riskier & compensate with higher returns