1. What are the challenges of valuing an early-stage company?

 

  1. In what ways is ORN a typical start-up company? In what ways is it atypical?

 

  1. What is the value of the firm under the venture capital method?

As per instructions in the discussion for this case, enter data for two valuations and resulting percentage stake for Everest Partners. One that tries to get as close as possible to the equity stake demanded by the investors, and another one where the inputs are closer to the situation of OutReach.

 

  Everest Partners Perez’s point of view
Ratio Selected*    
Ratio Value**    
Terminal Value    
Target Rate    
Post-money valuation    
Equity Stake    

* P/E? TEV/EBITDA? Mean of data? Median? Mean of subset of given comparable firms?

** After any adjustments made.

 

  1. What is the value of the firm under the discounted cash flow method? Assume that after 2017 cash flows grow at a rate of 5% forever.
   
Discount Rate  
Present Value of Forecasted Period  
Terminal Value  
Present Value of Terminal Value  
Total NPV  
Expected NPV*  
Equity Stake  

* Equal to Total NPV, adjusted for the probability of success, as given in the case.

 

  1. Is Everest Partners justified in asking for a 30% equity stake?

 

  1. What should Pete Perez do?

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