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VC ch 10
Terms in this set (7)
very difficult, no perfect methods; part art and part science; implied valuation is not the same as what a company could be sold for
Describe the valuation of early stage, high risk investments
very subjective and must use a set on projections based on key drivers
Describe terminal value
market comparables by industry
What is the best source for determining terminal value?
EBITDA, revenue, subscribers, net income
What are 4 financial measurements used to determine terminal value?
Management case, base case, conservative case
What are the three levels of projections?
Risk free or base rate of return plus:
-lack of liquidity premium
-value add premium for VC activity
-likely adjustment to future cash flow
Elements of the VC method discount rate
1. future investment rounds - dilution
2. management option pool
3. changes in assumptions underlying FV estimation
Other factors that affect the VC Method
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