Valuation

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.

The discount rate is a critical input in any discounted cash flow valuation analysis. How does an analyst estimate a reasonable discount rate for a private company that has no publicly traded debt or equity? This article focuses on best practices for estimation of the WACC in the context of a private company valuation. The discussion begins with an overview of the WACC, background on the components of the WACC, methods to estimate the WACC components for private companies, and an example of how to apply this framework to estimate a privately-held building materials company.

In December 2017, Congress’ tax reform bill, amongst many sweeping changes, reduced the marginal tax rate to 21% from 35% for corporations, and limited their use of interest expense as a tax shield. This article explores the implications of these changes for traditional methods of valuation, including the discounted cash flow (DCF) method and the EBITDA multiple method for the corporate manager and finance professional.

Traditionally confined to the realms of insurance and pensions, actuaries are now branching out into the wider business world. The long-termist and statistical approach of actuarial science makes it an invaluable tool for recurring income businesses. This article looks at how, showing examples of usage within customer lifetime value and human resources.

Grocery delivery startup Instacart has recently been valued at $4.2 billion. In this article, Finance Expert Patrick Gaffney works backwards and uses some basic assumptions to determine if the valuation is reasonable. With companies opting to stay private for longer, analyzing private companies in this way can help us better understand industries typically shrouded in secrecy and provide clarity on the efficacy of certain business models.

Startups nowadays are hyper focused on growth at all costs, a practice which often undermines the fundamental health of the business. This article takes an in-depth look at the importance of focusing on customer retention from day one and the practical benefits it can provide in the medium to long term.

Ahead of Snap's IPO, we take a look at whether the rumoured valuation makes sense, and find that whilst overall market concerns regarding DAU growth are justified, the market is likely under-valuing the company’s ARPU growth prospects. For us, Snap is a Buy.

Between 2013 and 2015, the number of Unicorns exploded to 140 members, marking an incredible growth spurt in valuations and positive sentiment toward the venture industry. But after a rocky 2016, in which scandals, funding downrounds, and more cautious investor commentary emerged, many have questioned the validity of the sector’s valuations. With this backdrop, 2017 is shaping up to be a make-or-break year for the Unicorn Club. Is the party over?