#BestPractices Posts

Valuation of private fintech startups is a step-by-step process that requires a holistic assessment of macro industrial factors and micro assumptions about the startup’s future prospects. Learn how to value fintech companies in a practical step-by-step manner with this working example for payments unicorn Transferwise.

Buying out the business you work for and then running it yourself doesn’t have to be a pipe dream. Management buyouts (MBOs) have been popular since the 1980s and when aligned correctly are appealing propositions for owners and motivated management teams.

Compared to traditional financial services businesses, fintech startups require different valuation approaches. This article explores these differences and the best practices to apply when appraising a fintech investment.

While selling one’s company can seem like a daunting and difficult task, there exists a proven model and framework that drives valuation to maximum levels and leads to deals successfully getting done. This post is a guide for those contemplating a sale, as to what are the primary and secondary valuation drivers in a sale and how the process is conducted.

As a venture investor, Natasha Ketabchi spends most of her day evaluating tech startups as potential investments. In early-stage investments, Natasha finds that the three things that matter most are team, product, and sales and marketing approach—including their go to market strategy. In this article, Natasha lifts the veil on what venture investors look for in a solid GTM plan.

Using the 2016 Wells Fargo Banking Scandal as an example, this article dissects the situation according to the principles of the three classic ethical theorists: Plato, Kant, and Mill. It then offers some suggestions on how to improve ethics in business.

Consultants often struggle to find new, solid clients. We asked Steve Blank, the founder of the Lean Startup movement (and someone who has helped hundreds of companies get a better product to market faster and worked with dozens of consultants along the way) how consultants can attract clients.

Steve’s advice is a bit counter-intuitive. But it’s something that Toptal’s best consultants have already been doing for years.

Burn rate is one of the simplest, yet most fundamental metrics that investors and startups focus on. It pertains to the total cash spend of the business per month, which demonstrates both growth progress and potential runway that the business has to survive. This article introduces the burn rate concept and the tactics that can be applied to optimize it.

Rewards programs and sales incentive schemes are necessary for any business that operates outbound customer acquisition channels. They encourage certain behavior and that, if poorly constructed, can lead to perverse results and conflicting interests. Creating a holistic plan that stimulates positive company-wide behavior is an art that has huge benefits.

Stock options are widely used in public and private markets, both as malleable trading tools and for employee compensation. Yet many do not understand the components behind how they are priced. This guide discusses what drives the behavior of call and put options and how they can be deployed within portfolio management.

Investment due diligence is a necessary process for both buyers and sellers to undertake to ensure the swift execution of their envisaged transaction. Although, with the stakes high, there are certain challenges that can arise throughout the process which, with careful planning and execution, can be mitigated.

In the life of almost any growing enterprise, there comes a point in time when the existing systems and processes become insufficient. Early-stage businesses tend to grow up with basic and low-cost software systems as well as a heavy reliance upon a few key administrative employees. Eventually, however, the software can’t keep up with the business, and the trusted employees become overtaxed.

For most enterprises at this key inflection point, implementing enterprise resource planning (ERP) software, which integrates all areas of the business, can help to overcome this issue. It’s a hugely consequential decision for the business and must be approached with an uninterrupted focus on risk management. While ERP may not be sexy, it is of utmost importance for growing businesses and should not be ignored. This article provides enterprise leaders with the benefits and risks of ERP, as well as a detailed step-by-step implementation guide.

Finding out your return on investment from a project can become a subjective process with the myriad of returns measures and formulas that exist. This overview provides a breakdown and explanation of what type of return you need to measure and how to calculate it. With further guidance on how to use returns data to guide objective decision making.

Biotech companies with little to no revenue can still be worth billions. Consider the most prominent 2017 biotech M&A deal when Gilead bought Kite Pharma for almost $12 billion. At the time of the deal, Kite had over $600 million in accumulated deficit, but it also had a pipeline of CAR-T cell therapies, which treat cancer. This article examines how to value such pipelines. It also focuses on the risk-adjusted NPV valuation methodology, portfolios of multiple drug candidates, and how value is impacted by the characteristics of the investor or acquirer.

Traditional approaches to valuing real estate can lean towards the qualitative side, relying more on intuition over sound rationale. Linear regression analysis, however, can offer a robust model for using past transactions in an area, to provide better guidance on property valuations.

Mergers and acquisitions are headline-grabbing events that are often the pinnacle of a CEO’s career. But they also often fail to generate value, as numerous studies over the years have shown.

With over 15 years of experience doing M&A deals, Toptal Finance Expert Javier Enrile shows that the main reason for disappointing results is simple: Most people think M&A is merely an exercise of agreeing on a price for the deal. What they fail to understand is that there is a science to doing M&A that often makes the difference between a deal being successful or not.

In this article, Enrile runs through three key tactics for ensuring your company can get the most value out of an M&A transaction.

The extent of investing in real estate for most individuals is in the bricks and mortar of their own house. For braver investors, there are a range of other options, the most notable being private real estate offerings. Similar to PE and VC funds, these structures can allow for tailored investments in skilled management teams undertaking complex projects.

Of the three functional categories that drive value in business—i.e., the “hard,” the “soft,” and the “intangible”—mission statements comfortably reside in the third, alongside such concepts as brand and culture.

But despite the skepticism that is often associated with this category, and having uncovered some of the greatest gems in the corporate arena, this article argues that mission statements, when crafted and utilized effectively, are capable of driving billions of dollars in value.

With $936 billion of uninvested private equity capital inching down market, why do 46% to 80% of lower middle market sell-side transactions fail to close? The usual answer is that companies are not ready for buyers’ examination and owners can be overly optimistic or even greedy.

Business owners can do much more to put themselves in the driver’s seat. Success boils down to the following: (1) take the time and do the work to prepare for an exit transaction and (2) apply “intelligent greed” to close your best deal.

From abstract spreadsheets to real-world application, financial models have become an inextricable part of business life and an indispensable part of every company’s toolkit. But irrespective of its ubiquitousness as a productivity and decision-making tool, many out there still have a love-hate relationship with it.

Finance expert Alberto Bazzana authors a comprehensive “how-to guide”, for both the novices and experts among us, detailing Wall Street’s best practices for intelligent, effective, and error-free financial modeling.

While growing investor enthusiasm has contributed to a historic $3 trillion of fundraising over the last five years, the PE industry faces increasing competition amongst firms, record-high multiples and other factors making it difficult to generate attractive returns. One aspect for consideration is succession planning, especially since CEO turnover at portfolio companies occurs at a rate of 73% and can increase hold times and decrease returns.

This article defines succession planning, and examines the best practices and mistakes to avoid in succession planning for PE portfolio companies. It also explores succession planning within private equity firms themselves, something PE firms have been uncharacteristically proactive about confronting recently.

Latin America boasts great investment opportunities with attractive risk levels, higher returns than home markets, and access to a large population base with growing income. However, Latin American acquisitions require special attention and include a number of difficulties unique to the region.

This article provides insights gleaned from Finance Expert Emilio Labrador’s 15 years of experience in Latin American oil and gas M&A. It provides practical tips for foreign acquirers considering investments in Latin America, on topics ranging from risk premiums in valuation, accounting due diligence, and legal considerations.

Attention on the financial aspects of startups tends to focus on the external measure of fundraising. Yet before this, there are many aspects for an entrepreneur to consider regarding setting their business up for financial success.

In this article, we address eight vital considerations to take around the equity, budget, and valuation components of a startup.

Advisory boards are undoubtedly controversial. While many articles sing their praises, others condemn them as mere headshots in pitch decks. The truth is that advisory boards are usually not silver bullets. Still, they can be powerful tools and yield strong ROI—if executed properly.

This article includes an overview of advisory boards, their economics, when they can and should be used, and a step-by-step guide to building one.

Starting a fund is an aspiration harbored by many financiers. While attention tends to focus on investing and deal making, the initial fundraising process is riddled with uncertainty.

This guide presents the main considerations to take when raising a fund, covering the legal, accounting, staffing, and strategic roadblocks that will be encountered.

Competitive strategy frameworks are widely known and mainstays of university curricula, despite being almost 40 years old. We often hear the stories of Walmart and Southwest Airlines, but what modern examples are there? In this article we use Michael Porter’s activity positioning framework to show successful applications of competitive strategy from modern digital companies.

$7.35 million. That’s the average cost of a data breach is. Sure, cybersecurity isn’t sexy. However, in today’s digital age, it is undeniably critical for large corporations and small startups alike. This is compounded by the fact that hacks are becoming commonplace.

Read on to arm yourself with awareness to these invisible threats, and tangible steps you can take to protect yourself and your company.

Fundraising, for companies at any stage, is undoubtedly a challenging process. Even for seasoned entrepreneurs and startups already experiencing market traction, a compelling pitch and accompanying pitch deck are still necessary. While there is variance around stylistic delivery of the pitch and aesthetic of the deck itself, you might be relieved to hear that the infamous pitch deck boils down to a formula.

Many have a love-hate relationship with Microsoft’s PowerPoint. While super flexible, the tool can also be manual, tedious, and all-consuming, especially for the uninitiated. Authored by a former management consultant and finance expert, this article will help every user—from the beginner to the advanced operator—smooth out some of their points of friction and become an expert-level user of the application.

Many newcomers to venture capital fail to appreciate some of the nuances that distinguishes venture investing from traditional forms of financial investing. This article delves into three areas in particular that new venture investors should look to understand.

When looking to sell your business, you will want to maximize its value through a combination of planning and timing. This article runs through some of the most important considerations to keep in mind when preparing for a sale.