valuation

valuation

Sanjay Gandhi shares an article that discusses strategies for companies and High Net Worth families and individuals that can provide a silver lining amidst the tough news and provide long-term benefits when valuations rise again.

The coronavirus (COVID-19) has resulted in significant public market losses, as reflected in daily stock market gyrations and volatility. Private companies, asset and debt values have equally been affected by the pandemic. For High Net Worth individuals and companies, certain strategies can provide a silver lining amidst the tough news and provide long-term benefits when valuations rise again. For many private holdings, COVID-19 will provide some downward impact on value. This can result from significant disruption in operations, revenue/margin drop off, challenges in accessing capital, slower growth and delayed exit timelines. Certain direct impacts can already be seen as the market for secondary sales has started to shrink. Another immediate impact is revision of near and medium-term cashflow projections.

What’s Different?

COVID-19 is a “Material Disintermediating Event”

For valuation purposes, we often consider past performance when looking at value. This can include recent financing rounds or historical financial performance of a company and market transactions/sales of companies. However, COVID-19 is a “material event” which can disrupt the assumption that historical data points are presumptively the foundation of the future.

This triggers the need for a fresh look to consider the value of a company in light of its prospects in current and future economic circumstances.

Key points include:

  • Top strategies
  • Factors impacting valuation
  • How to estimate forward-looking performance?

Read the full article, Smart Strategies in a Lower Valuation World, on OxfordVP.com.

 

Sanjay Gandhi shares insight into deal terms, valuation, and the importance of understanding your exit hurdles. 

We’ve seen a significant increase in founders talking to us about deal terms in the current funding environment, especially as the earliest signs of economic tightening and downrounds are starting to appear. Many ask, “How do I get the highest valuation” and our answer always is “That’s only part of the story, and usually not the most important part”. It is reminiscent of the comments received from a talk we’ve given around the country called: How Much Would You Get if You Sold Your Company for $100M? A surprising number of founders don’t know the answer to this, and it couldn’t be more important as you navigate through the funding landscape on the way to an exit.

What’s important to keep in mind is that venture-backed outcomes tend to be clearest at the extremes.  When the company is a homerun with a hockey stick trajectory, everybody wins BIG.  When the company is ill-fated early, you pack it up and move on. However, in that messy middle zone, which represents far and away the vast majority of venture deals, adroitly dealing with the issue of valuation vs. deal terms can make the difference between founders walking away with life-changing money or a cup of coffee.

What’s important to keep in mind is that venture-backed outcomes tend to be clearest at the extremes. When the company is a homerun with a hockey stick trajectory, everybody wins BIG. When the company is ill-fated early, you pack it up and move on. However, in that messy middle zone, which represents far and away the vast majority of venture deals, adroitly dealing with the issue of valuation vs. deal terms can make the difference between founders walking away with life-changing money or a cup of coffee.

 

Key points include:

  • The terms that make a difference
  • How multiple rounds of funding change the game
  • Knowledge is Power – know your exit hurdle

 

Read the full article, Do You Know Your Exit Hurdle?, on Oxfordvaluationpartners.com.

 

Umbrex is pleased to welcome Cyrille Alheritiere with Marmenia Consulting. Cyrille is a Freelance Consultant running his own firm based in Geneva. He specialises on advice to SMEs in particular in the preparation of business plans, valuations, due-diligence, sales & operations and fundraising pitch books.

Prior to starting his own activity, Cyrille spent 14 years at UBS in Front and COO management roles, his last role as Head of Wealth Management Latin America Geneva. Here he gained a deep understanding of entrepreneur’s needs and saw the opportunity to work closely advising SME owners. At McKinsey he worked out of the Business Technology Office in Brussels and Amsterdam on strategic banking and technology projects. An engineer with a PhD from University College London, an MSc from Georgia Tech, he has recently completed a degree in Sustainable Finance from the School of Sustainability Management Switzerland.

Husband, father of two and avid skier, he works on short-term or part-time retainer projects with SME owners who need a confidential, senior sparring partner who still greatly enjoys getting deep into an excel spreadsheets & powerpoint analyses to solve problems together. He is fluent in English, French, Italian and has good command of Spanish and Portuguese.