FAQ

Valuation

What are the Inputs required from the user?

+30 inputs allocated over three (3) sections:

  • Fundamentals: General information about the business.
  • Financials: Financial information about the business.
  • Transaction: Information about the deal with potential investors. Namely, whether you’re raising money or selling the business.

Below are examples of the quantitative inputs:

  • Revenue: Expected revenue of current year and estimated revenue over the next 2 years.
  • Costs: Expected costs, expenses, cash outflows of current year and estimated over the next 2 years.
  • Funding: The amount you’d require to execute your business plan, should you be raising.

What is the output I get after finishing the valuation process?

  • You first get to discover how much your business is worth today.
  • Then you get a business valuation report. A one pager report including detailed valuation, cap table, financial analysis, and more.

What is the Methodology?

InstaVal uses a proprietary approach based on universal corporate finance and investment analysis concepts and principles. We use valuation methods utilized by professional business appraisers and promoted by the IPEV standards on the premises of Fair Market Value (FMV). The Fair Market Value (FMV) is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Below are the 3 approaches we used in our methodology:

  • Market Method : Based on the law of one price to determine the value of an asset, by analogy to the selling price of similar assets.
  • Income Method : Discounts the present value of future cash flows generated by an asset or an investment.
  • Asset Method : Calculates the value of an asset as its total replacement cost.
My company is pre-revenue. Is InstaVal suitable for me?

Yes. Yet, you’d need to have your homework done for inputs

GLOSSARY

  • Asset: A resource owned and, or controlled by a business, be it tangible or intangible, that participates directly or indirectly in creating economic value for its shareholders and stakeholders.
  • Business Model: A company's model for how it will create value, by generating revenues while making profits.
  • Cash balance: The on-hand amount of money available in an (bank) account.
  • Cost of debt: Is the after-tax Interest rate of the company's Debts.
  • Debt: Interest-bearing securities that include senior debt, mezzanine loans, shareholder loans, etc.
  • EBIT: Earnings before Interest and Taxes, calculated as revenue minus expenses, excluding tax and interest.
  • Enterprise Value: The total value of the financial instruments representing ownership interest (equity) in a business entity plus the value of its debt or debt-related liabilities, minus any cash or cash equivalents available to meet those liabilities.
  • Equity Value: The value of a company available to owners or shareholders.
  • Fair Value: The price that would be received to sell an asset in an orderly transaction between market participants given current market conditions at the measurement date.
  • Financial Forecast: A commitment from company management to deliver x% market share using Y$ resources whilst executing the strategic sequence Z, constrained with market conditions prevailing at all times T of the business plan.
  • Investment: refers to the individual financial instruments held by an investor in an investee company.
  • Invested capital: Is the sum of Shareholders' equity and Net financial debt.
  • IPEV Guidelines: The International Private Equity and Venture Capital Valuation (IPEV) Guidelines set out recommendations, intended to represent current best practice, on the valuation of Private Capital Investments. The objectives of these Valuations Guidelines is to set out best practice where Private Capital Investments are reported at ‘Fair Value’ and hence to help investors in Private Capital Funds make better economic decisions.
  • Lifecycle: Is the stage evolution of a business over time.
  • Majority shareholders: A particular shareholder or block of shareholders holding a percentage of shares that gives them significant voting power.
  • Minority shareholders: A particular shareholder or block of shareholders holding a small proportion of a company’s outstanding shares, resulting in a limited ability to exercise control in voting activities.
  • Post Revenue: Phase when company starting generating revenues.
  • Pre Revenue: Phase in which the company does not generate revenues yet. This is the period when the company sets up the development of the product.
  • PreMoney valuation: Valuation of a company or asset prior to an investment or financing
  • Costs: Expected costs, expenses, cash outflows of current year and estimated over the next 2 years.
  • Return: The cash flows generated by the operating cycle of a business following upon an investment event. Be it an organic business decision or an external pure financial investment.
  • Revenue: The value amount charged for the delivery of goods or services in the ordinary activities of a business over a stated period
  • Share: Is a fractional unit of Equity ownership in a company.
  • Shareholders: Individuals or entities that claim share or equity ownership in the company.
  • Valuation: The process of measuring the fair value of an asset assuming the Investment is realized or sold at the measurement date whether or not the asset is prepared for sale or whether its shareholders intend to sell in the near future.
  • Venture Capital Fund: A private capital fund that invests in early stage enterprises with strong growth potential. These Investments are generally characterized as high-risk/high-return opportunities.

If you still have questions, we're happy to help out. Please send us an email or give us a call.

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