Startup Valuation Methodologies

	A	B	C	D	K
1	Method	Significance	When to use?	Others	Comments
2	Berkus Method	Simple method therefore can be used by anyone	Useful for pre-revenue startups		Lets add terms used which are not in glossary already to the glossary
3	LBO	Useful when large aquisitions have to be made	Should be used when large amount of capital cannot be committed for theaquisition	ISSUES TO CONSIDER FOR AN LBO TRANSACTION Industry characteristics: Type of industry Competitive landscape Cyclicality Major industry drivers Potential outside factors (politics, changing laws Company-specific characteristics: Strategic positioning within the industry (market share) Growth opportunity Operating leverage Sustainability of operating margins Potential for margin improvement Level of maintenance CapEx vs. growth CapEx Working capital requirements Minimum cash required to run the business Ability of management to operate effectively in a highly levered situation Market conditions: Accessibility and cost of bank and high yield debt Expected equity returns	Lets add methods and their significance and when they should be used
4	SOTP	Company with different business segments	Defending a company that is trading at a discount to the sum of its parts from a hostile takeover Defending a company that is trading at a discount to the sum of its parts from a hostile takeover Restructuring a company to unlock the value of a business segment that is not getting credit for its value through a spin-off, split-off, tracking stock, or equity (IPO) carve-out		We also need a model for Valuation of pre-revenue companies
5	Venture Capitalist Method	Pre and Post Revenue startups	Carried out from the investor's point of view
6	Liquidation Method	Not a very startup centric process	Used when the company's final sale value has to be determined
7	First Chicago Method	Post revenue startups	Used to determine the return on investment under all cases- failure, afloat and suuccess
8	Comparable Transactions Method	Pre and Post Revenue startups	Simple method used to compare two startups
9	Book Value Method	Post revenue startups	Useful for calculating the net worth of a startup
10	Scorecard Valuation Method	Pre-revenue startup	to determine the pre-money valuation of pre-revenue startups
11	Discounted Casf Flow	Post revenue startups	Detailed Method requiring exact financial information and Projections therefore a difficult method
12	Risk Factor Summation Method	Pre and Post Revenue startups	Comparing your startup with already existing startups in the industry or segment
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