Equity Financing

To reduce risk and maintain influence, venture capital investors typically invest through multiple rounds of financing tied to the achievement of key developments. Business owners typically ‘sell’ or commit a percentage of their business in exchange for the VC financing. This situation again calls for a proper and independent business valuation. 

We have significant experience working with VC/PE investors and understand how they approach valuing a business. The valuation begins with due diligence to understand the risk/return profile of the business and to determine their relative position within their industry. VC/PE investors examine metrics such as customer concentration, vendor relationships, quality of earnings, competitive landscape, cyclicality, industry and end markets to determine an appropriate value for potential investments. A thorough analysis of the company identifies strengths and weaknesses in these key metrics to determine the value investors deem appropriate. A valuation also provides business owners a roadmap of what they can do increase their value to investors before raising capital to minimize dilution associated with issuance of equity to investors