Many entrepreneurs have the misconception that the value of their businesses is the sum of their parts e.g. assets minus liabilities. The value of an early stage 3D printing startup that owns one machine worth $2M and has outstanding debt for $0.5M seems to be the acquisition price of the asset minus the outstanding debt,…
read more
Can you measure the value of a company relying entirely on financial tools and models? Should you ignore the story and vision behind the numbers? We say that an interplay between the numbers and the story produces the most reliable valuation. Demystifying Valuation The business valuation process is an agreement between two parties, where the…
read more
Do you prefer to listen to podcasts? Listen to the audio here I have a patent and that is a reason to determine a high valuation! My team has a lot of experience in this field, so our company should be valued more! We have a unique sales team and that should set our valuation…
read more
Multiples is a term widely used in lots of valuation theories. But why do we use valuation multiples? We assume that a peer group of comparable firms for which the market value is available can be used as a proxy for the valuation of the company we are evaluating right now. The multiple is a ratio, composed…
read moreHigh valuations or better yet unrealistic valuations are the underlying cause of a bubble. However, valuations are always just opinions and agreements, they always come down to what the market is willing to pay. How do you find out, then, if your startup valuation is too high? A realistic valuation is based on an honest…
read moreThis article originally was published on the MergeLane Blog and is republished with permission of MergeLane The valuations set for each round of financing can have significant consequences for startup investors and entrepreneurs. Thanks to new and improved startup resources, it’s now much easier to understand how high startups can value their company. However, the…
read more
While it is true that valuing a business is part art and part science, specific methodologies are available to determine the valuation of your company. In this article, we are going to work out an example of how to value a business using 5 of the most frequently used valuation methodologies. But first, we need…
read moreCan you actually put a price on something that changes as quickly as businesses? The answer is…yes! But before we do that, we need to talk about the underlying valuation principles and lay down a framework for valuing businesses. To understand the valuation of a company we first have to identify what the definition of the…
read moreIf you approach a Venture Capitalist or a Business Angel, you will probably hear that “I need to be compensated for the risk I’m taking” or “I want a larger return than that”. But, what does it mean? What’s the link between discount rate and required return and how it is related with the amount…
read more
We already talked about projections, cash flows and relevant topics surrounding startup financial valuation. But how do you convert all these parameters to the future to calculate the value of the company today? One of the major methods to be used is called Discounted Cash Flow (DCF). What is DCF? To start, check out this…
read more
