It is possible to attach a value to a start-up business because it is largely assessed on projections of future earnings rather than past results.

Often the objective when valuing a start up operation is not sale or restructure but securing investment. To achieve this goal it is necessary to demonstrate three things:

• The investor won’t lose their initial investment
• The investor will actually make money
• The investor can understand how much money could be made over a given period of time so they can assess just how long their investment will take to realise a satisfactory return

The minimum documentation you would need to provide is financial projections over the next 4 years (i.e. forecast/budgeted Profit and Loss)

Other documents that will assist with the valuation of your start up business should cover a minimum period of 3-5 years and include:

• Business Plan incorporating
  • Detail of your offering, be it a service or a product, and where you are at in the development stage
  • Industry segment review and analysis identifying your sustainable competitive advantage and an appreciation of the competitive landscape
  • Sales/Distribution plans
  • Marketing plans
  • Any contingency plans you may have developed in response to identifiable threats
  • Any dependencies that may exist
• Legal Structure

The Bizval Insight Paper on Start-Ups and Business Valuations is available for free. Register Now.

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