Build Significant Value

Build Significant Value

• 1.
  BUILD SIGNIFICANT VALUE
• 2.
  RAISE CAPITAL FLOAT MERGE ACQUIRE SOLID BUSINESS FOUNDATION Customers,product to market fit, marketing, brand, team, office, infrastructure, distribution, partners, website ESTABLISH VALUATION EXIT / SELL BUSINESS OBJECTIVE
• 3.
  2 to 3times annual profit} TRADITIONAL VALUATION
• 4.
  Discounted cash flowmethodology:
 ‣ Risk ‣ Future profit potential ‣ Sector ‣ Timing ‣ Strategic value to investor or buyer ‣ “Brand” VALUATIONS
• 5.
  RETAIL 12 MEDIA 12 Source: ASX FINANCE 11.3 MINING 12 PROPERTY 9 INTERNET 22 ASX average12 x Private companies average 2.5 x The value gap is called “private to public arbitrage” PUBLIC VALUATIONS
• 6.
  TRADITIONAL BUSINESS PTY LTD $500k profit EXITTRADE SALE @ 2 x = $1 million STRATEGIC SALE @ 4 x $2 million SALE TO LISTED CO 
 @ 6 x = $3 million ASX IPO @ 8x = $4 million EXIT PRICE To achieve a higher sale price, it’s much smarter to focus on not only increased profit but also HOW to sell and WHO to sell to.
• 7.
  VALUATION METHODOLOGIES 
 ANDKEY VALUE DRIVERS
• 8.
  START UP VALUATIONS
 – ART OR SCIENCE? • Rule of thumb • Simple math • Experience • Investor objectives
• 9.
  DIFFERENT TYPES OFBUSINESS 
 = DIFFERENT LEVEL OF VALUE • Lifestyle start-ups: work to live their passion • Small business start-ups: work to feed the family • Scalable start-ups: born to be big • Buyable start-ups: Acquisition targets • Social start-ups: driven to make a difference
• 15.
  KEY BASELINE MEASURES
 FOR ALL START UPS 1. Management: founder’s backgrounds and relevant experience 2. Market: size of market, competition, barriers to entry 3. Product/service: problem and solution, unique value proposition 4. Business model: Scalability, sales strategy, strategic relationships
• 16.
  “BUT THAT’S NOTFAIR!”
 SAID THE ENTREPRENEUR • “I’ve already put heaps of money into this” • “I’ve worked really hard” • “My ‘market’ (aka friends and family) told me they love it!” • “I just think that’s what it’s worth”
• 17.
  THE REALITY OFVALUATIONS
• 18.
  THE GAME ISIN THE NAME 
 VALUEATION You must be focussed on building value over anything else 
 - don’t get distracted
• 19.
  ACTIVITY: THE WHEELOF VALUE
• 20.
  IMPORTANT VARIABLES
 FOR EARLYSTAGE VALUATIONS 1. The value of a start up is determined largely by acceptance 
 from both parties
 2. There are 2 major considerations:
 a) Economics
 b) Control
 3. Be realistic - understand your growth milestones, how much you need and how much control you are prepared to give up to get there