Entries tagged with “valuations”
Articles
8 articles found for valuations:
- Purchase Price Allocations: What CFOs need to know to get it right?
Purchase Price Allocation (PPA) is an important component of a merger and acquisition transaction. It entails distribution of the value of the purchase consideration among various tangible and intangible assets (and liabilities) acquired from the target following the merger/acquisition. Residual purchase consideration, if any, is recorded as goodwill in the acquiring company’s books. A fairly complex process, it requires deep domain knowledge, understanding of the business plan, and expertise in intrinsic valuation to ensure all aspects of the analysis have been factored in accurately.
- Downward Spiral of Tech Industry Valuation
The Indian tech industry has always been a strong player with consistent growth, but 2022 was a challenging year, and many companies saw a fall in their valuations. This was attributed to factors such as fear of recession fueled by rising interest rates in developed markets, which hampered the revenues, sales, and growth prospects of many tech firms worldwide, including India. Whether it is a short-term effect or will India’s IT sector suffer long-term consequences is yet to be seen.
- Are Risk-Free Bonds Really “Risk-free”?: The Case of Silicon Valley Bank
Silicon Valley Bank (SVB), one of the leading banks in the US and regarded as the banker for startups, was shut down on March 10, 2023, by regulators due to its heavy investment in bonds and agency-backed securities. SVB’s bonds fell when the Federal Reserve increased its interest rates, thus creating chaos. Can SVB be saved and regain its former glory? Are risk-free bonds really “risk-free”?
- 5 Reasons why CFOs Like (and Dislike) Goodwill
Purchase price allocation (PPA) and goodwill assessment is a must-have for any acquirer following an M&A deal to report the correct value of the assets on its financials. Assessing goodwill has always been a complex process and could create a fair amount of issues if not handled correctly. CFOs usually have a love-hate relationship with goodwill as it relates to their specific situation. The article provides a brief overview of the two sides of a goodwill assessment.
- Aranca: Driving Seamless Customer Experience in Purchase Price Allocation
Aranca sets itself apart in the realm of Purchase Price Allocation (PPA) by seamlessly blending precision with exceptional customer service. From collaborative kick-off calls to customized information checklists and meticulous legal document reviews, Aranca ensures accuracy at every step. Proactively involving auditors and incorporating feedback from all stakeholders, Aranca fosters transparency and trust throughout the valuation process. With a commitment to minimizing client burden and delivering peace of mind, Aranca's customer-centric approach makes it the preferred partner in the high-stakes world of mergers and acquisitions.
- Contingent Consideration (Earnouts): A Good Approach to Make Deals
Earnouts are a smart way to make deals. They are beneficial to sellers as they get a payoff with the successful execution of the deal, while payouts work for buyers as an intelligent risk mitigation measure.Whether an investor is considering a merger or simply trying to get the best out of an investment in a venture, valuation is the key. It is critical for investors to make well-informed decisions and understand the risk involved. A fair valuation is a good indicator of future potential as well.
- The Pitfalls of Using Only Preferred Share Price for Common Stock Valuation
Applying fundamental valuation approaches to value an early-stage business is challenging; thus, many have abandoned them in favor of a mathematical approach called the back-solve method. The method requires less judgment on the part of appraisers; therefore, it is easy to apply. However, the method tends to overestimate business value, so ignoring fundamental approaches would lead to the wrong conclusion.
- Biases and Investor Choices: A Behavioral Finance Perspective
Behavioral finance is a fast-growing field that focuses on the complex interplay between human psychology, investor behavior, and financial markets. By examining the impact of psychological elements on investor conduct, specialists in behavioral finance aim to explain why financial markets behave in a certain manner, and how investors can take better decisions A plethora of cognitive elements, including but not limited to overconfidence, confirmation bias, herd mentality, and loss aversion, can significantly influence investment decisions. Gaining insight into these biases can offer valuable perspectives on market trends and support investors in making decisions that are better informed.
Blogs
3 blog posts found for valuations:
- Healthtech Startups - Driving Innovations in Healthcare
Technology enabled vertical of healthcare is known as healthtech. This sector has recently seen many startups offering innovative products or services that improve the distribution of healthcare or support it in other ways. While developed countries have seen its quick adoption, emerging nations are also increasingly accepting it and implementing these products to make their healthcare more efficient. The venture capitalist and investment companies have taken notice of the growth in this sector and have been investing in promising startups.
- Virtual Healthcare – Relevance Post the Pandemic
The pandemic brought fore the need for and importance of virtual care. Apart from eliminating distance, virtual health can support in-person care as part of an integrated healthcare strategy. It addresses underserved and under resourced patient populations. By enhancing accessibility, convenience, and the experience of receiving and providing treatment, it has the potential to be advantageous for both patients and doctors. But will it continue to see robust growth post the pandemic?
- Founder’s Stock Sale — How Not to Turn it Into a 409A Nightmare
A Founders’ Stock sale can have serious and far reaching implications on the pricing of stock options due to 409A provisions.
While the extent of the impact can vary significantly, it’s important to understand when this affects companies the most as well as how they can structure such transactions to mitigate these effects.
Special Reports
7 special reports found for valuations:
- Business valuations using the Backsolve Method
Valuation of startups is a tricky business due to lack of quantifiable metrics. However, the Backsolve method is widely accepted and increasingly used by appraisers. The formulas and ways to analyze under this method are mathematical, rendering it fairly reliable and accurate.
- Hearing Aid Market: Valuations are Poised for a Rebound
Hearing loss is a major health concern globally, with over 1.5 billion people experiencing some degree of hearing impairment at the end of 2022 according to Amplifon. Among them, an estimated 430 million individuals require rehabilitation, and this figure is projected to reach 700 million by 2050 due to factors such as increased life expectancy and high noise exposure. Untreated hearing loss poses substantial health risks contributing to cognitive decline, depression and falls. This issue carries a staggering global annual cost of approximately 1 trillion US dollars, including health sector spending, lost productivity and associated social costs. Despite these implications, the adoption rate of hearing aids remains low, standing at around 37% in high-income countries and between 5% and 10% in emerging economies.
The post-lockdown period in 2021 witnessed a surge in ENT clinic visits, coinciding with a recovery in surgical rates and increased demand for hearing implants. The adoption of smart hearing aids has increased considerably, propelled by factors like rising noise-induced hearing loss, heightened awareness and targeted marketing programmes. The integration of digital technology is dynamically shaping the hearing aid market by responding to demographic shifts and technological advancements, and launching innovative products combining cochlear implants and hearing aid technologies. These developments, coupled with attractive valuations, present profitable opportunities for industry participants.
- Global Private Equity Factbook – Q4 2022
Global PE investment activities improved in Q4 2022 with better access to private credit. Deal activity is anticipated to stay slow owing to the unstable macroenvironment; however, the record high level of dry powder is expected to encourage small-sized deals in 2023.
In Q4 2022, PE deals volume increased 7% with continued investments in public companies and add-on targets. Capital invested expanded 15% while deteriorating company valuations led to fewer exists. PE fundraising continued to decrease as LPs remained cautious. IT, energy, and transportation sector deals accounted for 67% of total PE investments in Q4.
Investment activity is likely to maintain a slow pace in the coming quarter as PE firms focus on creating value and identifying potential targets active in recession-resistant sectors such as the information technology and healthcare.
This edition of the Global Private Equity Factbook offers insights on global PE investment activity, features key sectors targeted, and provides an outlook for the industry in the coming quarters.
- Global Private Equity Factbook – Q1 2022
Global PE activity weakened in Q1 2022 due to the uncertain macroeconomic and geopolitical factors. Deal activity is expected to remain slow in the short run and likely to pick up as the global economy recovers in H2 2022.
In Q1 2022, PE deal volume fell as PE investors remained cautious and invested in big-ticket deals, driven by IT, financial services, and energy sector. Exits declined significantly as macroeconomic factors such as inflation, rising interest rates, and Russian–Ukraine war impacted valuations.
The momentum of investment activity is anticipated to remain slow in the coming quarter and pick up by the end of 2022 as the global economy stabilizes.
This edition of the Global Private Equity Factbook offers insights on global PE investment activity, features the key sectors targeted, and provides an outlook for this industry in the coming quarters.
- Growing Consolidation in the US Oil & Gas Sector
- Global Private Equity Factbook – Emerging Tech Edition
Global PE deal volume declined in Q2 2022 due to the uncertain macro environment. Deal volume is expected to be impacted by economic slowdown, and PE investors are likely to focus on driving value in their current portfolio.
In Q2 2022, PE deal volume declined as PE investors remained cautious of high valuations led by inflation and a recessionary outlook. However, average deal size doubled due to megadeals. PE investors continue to focus on emerging technologies, such as SaaS, CleanTech, and FinTech, which represented 33% of total deals completed in Q2 2022.
Investment activity is anticipated to remain slow in the next few quarters, as PE investors are likely to focus on driving value in their current portfolio companies amid fears of recession in several economies.
This special edition of the Global Private Equity Factbook offers insights on global PE investment activity focusing on emerging technologies, and provides an outlook for this industry in the upcoming quarters.
- Fintech Decoded: 1H23
Fintech deal activity in 1H23 witnessed a period of notable turbulence, with subsectors such as Payments+ and Blockchain/Crypto receding, while Business Solutions and Financial Markets domains gained prominence.
While venture capital funding experienced a substantial decrease in value, deal volume remained remarkably robust throughout this timeframe. Projections based on the current funding trajectory suggest that 2023 could potentially rank as the third-highest year in terms of total investment, following the precedent set by the years 2021 and 2022.
The economic landscape was greatly influenced by the surge in U.S. inflation, the Federal Reserve's withdrawal of stimulus measures, and a sequence of interest rate hikes contributing to a fragile economic environment marked by the impending gloom of recession. Regulatory uncertainties from GDPR, China's cryptocurrency ban, and geopolitical tremors like the Russia-Ukraine conflict added further complexity.
Venture capital investors displayed a noticeable shift towards directing their attention to angel and seed-stage companies while taking a more rigid stance towards early and late-stage VC firms due to increased valuations arising from the 2021 surge. In this edition of Fintech Decoded, we bring you insights into the sector’s performance following the macroeconomic headwinds, along with notable funding trends across the globe in the fintech space in 1H23.