Instructions

Step 1: Get EBIT and D&A from the income statement

Step 2: Calculate the net working capital (NWC)
There are two ways to find NWC:
1. NWC = Current Assets (less cash) - Current Liabilities (less debt)
2. NWC = Accounts Receivable + Inventory - Accounts Payable

Assumptions Discounted Cash Flow Entry

Tax Rate 40% Date 12/31/2019
Discount Rate 12% Time Periods
Perpetural Growth Rate 3% Year Fraction
EV/EBITDA Mulltiple 7.0x EBIT
Transaction Date 12/31/2019 Less: Cash Taxes
Fiscal Year End 6/30/2020 Plus: D&A
Current Price 10.00 Less: Capex
Shares Outstanding 10,000 Less: Changes in NWC
Debt 50,000 Unlevered FCF
Cash 200,000 (Entry)/Exit 50,000
Capex 10,000 Transaction CF 50,000

Terminal Value
Perpetural Growth 486,987
EV/EBITDA 546,278
Average 516,632
2020 2021 2022 2023 2024 Exit
6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 6/30/2024
0 1 2 3 4
0.50 1.00 1.00 1.00 1.00
47,814 51,095 55,861 58,693 63,039
19,126 20,438 22,345 23,477 25,215
15,008 15,005 15,003 15,002 15,001
10,000 10,000 10,000 10,000 10,000
375 611 398 511 272
33,322 35,051 38,122 39,707 42,552
516,632
16,661 35,051 38,122 39,707 42,552 516,632

Enterprise Value

Value of the Startup € 461,871

 Instructions
Step 1: Get the total assets and total liabilities from the income statement
Step 2: Calculate using the formula below

Assumptions Book Value Formula

Total Assets € 500,000
Total Liabilities € 200,000 Book Value of the Startup € 300,000
 Instructions
Step 1: Fill out the below parametres with values between €0 - €500.000
The values can be found by ranking the startup: €0 = None, €500.000 = Max
Step 2: Change the currency to your current market and take the overconfidence effect into account

Berkus Method
Sound Idea
Working Prototype
Quality Management Team
Strategic Relationships
Product Rollout or Sales
€ 300,000
€ 120,000
€ 150,000
€ 280,000
€ -

Startup Value € 850,000

 Instructions
Step 1: Determine average pre-money valuation of the pre-revenue companies in the region
Step 2: Compare the target startup to your perception of similar deals done in your region, considering the below factors
Fill out the details about the target startup considering 100 % as the norm

Assumptions
Average pre-money valuation in the region € 1,000,000

Comparison Factor Range Target Startup Factor

Strength of Entrepreneur and Team 0-30 % 150% 0.45
Size of the Opportunity 0-25 % 125% 0.31
Product/Technology 0-15 % 80% 0.12
Competitive Environment 0-10 % 50% 0.05
Marketing/Sales/Partnerships 0-10 % 75% 0.08
Need for Additional Investment 0-5 % 100% 0.05
Other factors (great early customer feedback) 0-5 % 100% 0.05

Sum 1.108
Scorecard Method

Pre-Money Valuation € 1,107,500

Instructions
Step 1: Determine average pre-money valuation of the pre-revenue companies in the region
Step 2: Adress the list of risks below associated with the startup and it's industry
Assign ratings to each risk factor and adjust the result to the average pre-money valuation

Assumptions
Average pre-money valuation in the region € 1,000,000

Rating System Risk Rationale Adjustment to Pre-Money Valuation

+2 Extremely positive mitigation Add €500.000
+1 Positive mitigation Add €250.000
0 Neutral Add/Subtract nothing
-1 Negative mitigation Subtract €250.000
-2 Extremely negative mitigation Subtract €500.000

Risk Factor Ratings Add/Subtract

Management Risk +2 € 500,000
Stage of the Startup -1 -€ 250,000
Legislation/Political Risk 0 € -
Supply Chain Risk +1 € 250,000
Sales and Marketing Risk +2 € 500,000
Funding/Capital Risk -2 -€ 500,000
Competition Risk 0 € -
Technology Risk +1 € 250,000
Litigation Risk -1 -€ 250,000
International Risk 0 € -
Reputation Risk +1 € 250,000
Exit Value Risk 0 € -
Sum € 750,000
Risk Factor Summation

Pre-Money Valuation € 1,750,000

Instructions
Step 1: Get EBITDA from the income statement
Step 2: Find regional/industry average multiple

Assumptions Enterprise Value

EBITDA € 150,000
EBITDA Multiple x 8.0 Value of the Startup € 1,200,000
Instructions
Step 1: Use any of the other formulas to valuate your startup
Step 2: List the assumptions you want to create scenarios for
Step 3: Copy and paste the list of assumptions by the number of scenarios you wish to have
It is recommended to have at least three: 1. Base case, 2. Worst case, 3. Best case
Step 4: Fill in all details of each scenario
Step 5: Ensure the layout of all three scenarios is identical then calculate and compare