Business Valuation for Private Equity and Venture Capital (VC)

Business valuation consultants play a key role to take the perspective of the private equity firm that is evaluating potential investments.

The private equity class stretches from venture capital (VC)—working with early stage companies that in many cases have no or minimal revenues but have potentially good ideas or technology to large buyouts.

When a private equity firm is performing valuations of potential acquisitions, this effort is particularly complex because in most cases.

Private equity firms can face considerable challenges in valuing these companies, including but not limited to evaluation of financial projections, doing appropriate adjustments, industry potential, cash flow modelling etc. Private equity also finds it difficult to find appropriate benchmarks in setting the valuation assumptions. A formal and supportable valuation report is usually required for getting approval from investment committee.

Even the acquisition target is a listed company, private equity performs multifaceted assessment on top of making reference to the latest trading price. More than one valuation approaches are usually applied.

In valuing VC projects, we spend all our effort in bench marking our assumptions with industry or market data whenever possible. Industry and economic researches are performed for fundamental assumptions on growth rates. Peer comparison is widely applied for setting margins, cost, working capital and capital expenditure. Valuation will also analyse and adjust according to phrases of investment.

Facing the threat of Covid-19, private equity is likely to slow the pace of striking deals. The market appetite may also be slighted shifted to put more weights on healthcare related projects. Performing valuation for private equity or project founders seeking for PE/VC investments will continue to be our focus in 2020.

Valtech's Technology

Valtech’s team is developing and maintaining strong internal database, mobile applications and web applications to cater for ever changing reporting requirements and higher expectation on efficient delivery of advisory result.