Valuing Technology Businesses (In-House)

IFF - International Faculty of Finance
Training overview
Corporate / Group Training
3 days
From 3,095 GBP

Start dates
3,095 GBP
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Course description

Valuing Technology Businesses (In-House)

  • Differentiate between corporate and technology valuation and lifecycles
  • Apply the DCF model to technology companies and it s limitations
  • Evaluate the stable growth stage and calculate terminal value
  • Use revenue and profit multiples in technology valuation
  • Use EBITDA and know its limitations
  • Use the real options approach and understand the challenges in its application
  • Use alternative valuation approaches including intrinsic, relative, probabilistic and real options
  • Value start-up companies
  • Value pre IPO companies, including the characteristics of a growth company and the value of equity claims
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Training content

Defining the Problems

  • Differences between traditional corporate valuation and technology valuation
  • Handling data problems that emerge with early-stage technology companies
  • Summary review of valuation techniques and applications to technology start-up businesses
  • Valuing early-stage development businesses and projects
  • A life cycle view of start-up companies
  • Characteristics of start-up technology companies and sectors
  • The key challenges with technology start-up companies

Valuing start-up technology companies

  • Valuation issues – Intrinsic Value and using DCF
  • How to value existing assets in a start-up
  • Cash burn and the effect on existing assets
  • Estimating cashflows and expenditure patterns
  • Evaluating the expected growth rate
  • Estimating the market size and rate of maturity development
  • Assessing the competitive response
  • Combining growth rate with investment intensity and return on investment
  • The future of the business – high growth and growth phases
  • Applying the appropriate discount rate and varying the rate over time
  • Adjusting risk for small fast-growing businesses
  • Discount rates for pure equity-financed businesses
  • Evaluating the stable growth stage and calculating the terminal value
  • Inherent problems of using the DCF model to value technology companies
  • Assessing the likelihood of potential failure or dislocation risk and adjusting the valuation figure

Valuation issues – Relative Valuation

  • Problems with start-up multiple analysis
  • Pitfalls in using multiple approach for technology companies
  • Importance of using EBITDA if possible
  • Using revenue multiples
  • Examining the broad range of possible comparisons
  • Using statistical analysis to improve the multiple comparisons
  • Determining the starting point – revenue multiples vs profitability multiples vs other multiples
  • Which year? – Determining stability for multiple calculation and techniques for “normalising” multiples vs the sector
  • Benchmarking using multiples

Valuation issues for a SaaS type business

  • Key valuation drivers
  • SaaS metrics
  • Customer acquisition channels
  • Product lifecycle
  • SaaS Capital valuation model approach

Using the Real Options Approach

  • The problems inherent in using the NPV/DCF approach to valuation
  • Defining real options – patent rights, expansion option, abandonment option
  • Why real options are more applicable to technology companies
  • Basics of real option valuation using binomial trees and a lattice approach
  • Financial option pricing (Black Scholes) and the link to real options
  • Management options and the value of strategic flexibility
  • Using real options approach to improve the understanding of technology valuations

Structuring an exit

  • Governance/shareholders agreements in minority and majority acquisition
  • Majority versus minority rights
  • Stress testing the assumptions

About IFF

International Faculty of Finance - IFF Finance & IFE Energy - Specialist Training Courses

As one of the world's leading specialist financial training organisations, The International Faculty of Finance, provides participants in the global financial markets with intensive technical training programmes designed to help them succeed on the global stage.  Established in 1991 we...

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