The Independent Valuation Analysis is the most comprehensive document created for clients.
Problem
How do investors value my company? And what value might be assessed in 1 year, or in the next 3 to 5 years? When do I raise funds, and how much at each point to optimize shareholder value. How do I shorten the turnaround time from investors to get a definitive commitment?
Solution
The Independent Valuation Analysis (IVA) addresses all these questions and provides greater insight to investors. The IVA describes the fundamental business opportunity, the company’s solution(s), the competitive environment and a detailed forecast and evaluation analysis. The forecast and valuation methodologies are acutely explained in detail so investors can quickly assess the opportunity and make their adjustments.
This document can be the most critical tool to help investors and potential stakeholders thoroughly understand the new venture. The IVA completely explains the company story, the competitive environment, the product/service uniqueness, and the assumptions behind the forecast and valuation analysis. Forecasts and valuations are validated with publicly available data on industry participants or comparable groups based on certain parameters. The easy to reference document brings uninformed investors up to speed and provides the detail necessary for each stakeholder group to adjust any component of the forecast or valuation to meet their parameters.
Several different valuation methodologies may be used for different valuation timeframes based on the new ventures parameters. Commonly used parameters include:
- Multiples on Revenues, EBITDA, Net Income, Book Value
- Comparables in the industry or special group of companies meeting certain criteria
- Discounted cash flow analysis
Several Executive Summaries are integrated into the Independent Valuation Analysis to address the different mindsets at each investment firm. Investors will typically need to be reminded of the merits of each opportunity since they are reviewing many. The modularity of the IVA has many sections that can stand on their own – this benefits investors when they re-reference or check a certain component. The objective is multi-faceted: (a) to facilitate the investor decision process, (b) justify the offering or asking price, and (c) clearly understand the future value at different intervals in the next several years. For a potential acquisition, it is important to assess the value today for the transaction, and what the future value may be based on different operational or management strategies. For a divestiture, current and future value assist in justifying the asking price, and opens up the strategic question of how the funds from a divestiture will be used.
The IVA is not a 409a valuation that is used to assess option value. The IVA has more depth and is more readable than the typical 409a valuation, and it is designed for a range of investor mindsets and stakeholders. We can perform 409a valuations, but this is more of a cookie-cutter approach.
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