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PARAMETER UPDATE P5.1

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On March 4th, 2019 you’ll be upgraded to the latest version of Equidam with updated valuation parameters. This may result, on average, in a slight valuation decrease.

What’s changing

1 | Average valuations used in the Scorecard Method and maximum valuations used in the Checklist Method

We base our estimates on real transactions by country since July 1st, 2016. Whenever we were not able to find a significant amount of real pre-money valuations in a given country, we broadened our perspective the closest larger geographic entity (namely, continental region and continent). You can refer to the table at this link to see how they will change for your country specifically.

2 | Industry EBITDA multiples used in the VC and DCF with multiple

Our multiples are based on public market conditions at the beginning of current year. Data are taken at global level, and aggregated by industry. You can refer to the table at this link to see how they will change for your industry specifically.

3 | Discount rate components used in the two DCF methods

Most of the parameters determining the discount rate have been updated to reflect the most recent market situation in terms of systemic and industry-specific risk. You will be able to see these parameters in your valuation reports.

General comments on the effect of the changes

On average, valuations will experience a slight decrease:

  • The correction of the EBITDA multiples incorporates the downturn markets experienced at the end of last year. After a decade of growth, investors are starting to curb their expectations
  • We decreased the number of transactions occurred in a given country necessary to have a country-level average and maximum valuation.
    • As fewer deals usually occur in emerging countries, their average and maximum valuations were previously influenced by countries in the same geography with a more mature startup environment
    • Current parameters are generally more conservative, but more precise and tailored on the specific environment

Please don’t hesitate to let us know in case you have any questions. Thanks for using Equidam!

The Equidam Team

Luca Trevisan
AUTHOR

Luca Trevisan

All stories by: Luca Trevisan

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