Blog Category: Business Valuation

Trust-based estate planning is one of the most advanced strategies available for protecting wealth, minimizing tax liability, and asset transfer to future generations. However, its effectiveness hinges on one often-overlooked factor: asset valuation. With the federal estate and gift tax exemption set to decrease significantly after December 31, 2025, many families are exploring advanced structures … Continued

Recently, OpenAI became the world’s second-most valuable startup after a $40 billion funding round, reaching a valuation of $300 billion. In 2025, we are no strangers to such headlines regarding AI startups. For instance, Safe Superintelligence reached a valuation of $32 billion without even having a product. With such strong hype surrounding the sector, keeping … Continued

Throughout a startup’s lifecycle, its business model, cash flows, and nature of operations keep evolving. Initially, many startups focus primarily on research and development. As they grow and reach key milestones, they begin generating regular revenue, attracting investor interest, and expanding operations to include product development, customer acquisition, and marketing. By the latter stage of … Continued

Imagine trying to price a rare artwork without knowing what similar works have sold for—every guess feels like a shot in the dark. In the fast-moving world of SaaS, where recurring revenue and growth potential are prized, entrepreneurs, startups, and investors face a similar challenge:  How do you pin down what a software business is … Continued

International expansion is a key chapter in any organization’s story. It carries benefits such as greater geographical diversification and scaling of operations. At the same time, it is also a significant financial commitment that carries substantial risks. Given its potential impact on long-term success, such a move demands thorough evaluation and planning. While contemplating such … Continued

Debt, if mismanaged, has the potential to become a destabilizing force capable of bringing down even the most powerful corporations. For instance, General Motors (GM), a prestigious American automobile company, had to file for bankruptcy after its debt became unmanageable. The company could only be rescued after its debt was reduced from $170 billion to … Continued

The data highlights a thriving US startup ecosystem driven by advancements in AI, fintech, SaaS, space exploration, and biotech. Venture capital firms play a pivotal role in fueling these unicorns, while strategic partnerships amplify growth potential.  For entrepreneurs or investors interested in these sectors, focusing on scalable business models and emerging technologies could yield significant … Continued

Long ago, billion-dollar startups were scarce; they deserved their magical nickname: unicorns. Today, these powerful private companies have multiplied across the global economy, transforming from rare curiosities into formidable herds that reshape entire industries.  With more than 1,550 unicorns worldwide in 2025, their distribution tells us a compelling story about where innovation thrives, how capital … Continued

Jawbone, a wearable tech startup, was incorrectly valued at $3 billion as this valuation didn’t account for market realities like competition from tech giants. As a result, the company had to shut down, much to the dismay of investors and employees. Unfortunately, business valuations that do not align with market conditions are a common occurrence. … Continued

Valuation is an important factor in the startup world. Think of Lehman Brothers. A Wall Street giant, its overvaluation was the precursor to their dramatic 2008 collapse. Lehman Brothers had assets of $691bn at its height, but this high valuation masked the fragility of its finances. It was a warning about overpriced valuation. When the … Continued

The PEG ratio is one of the most valuable metrics in an investor’s analytical toolkit, offering deeper insight than traditional valuation measures. While the widely-used Price/Earnings (P/E) ratio helps assess a company’s current valuation relative to its earnings, the PEG ratio takes this analysis a crucial step further by incorporating the critical growth element. This … Continued

Industries have evolved distinct liquidity patterns in the financial ecosystem based on their unique operational demands, cash conversion cycles, and market pressures. A manufacturer stockpiling inventory will present a different financial profile than a subscription-based software company, though both might be equally robust. Whether you’re an investor seeking stability, or a manager gauging liquidity, understanding … Continued

Consider you are a small manufacturer and are faced with leasing a warehouse for an extreme seasonal sale event. Due to short notice, the owner demands a high security deposit and excessive rent. Without proper warehousing, you may lose significant profits. At this juncture, you need to assess whether you can pay the rent and … Continued

When looking at a company’s acid test ratio, it’s important to compare it not only to the general benchmark but also to industry-specific averages and the company’s historical performance for a more comprehensive assessment of its liquidity position. The acid test ratio is widely used across various industries for financial analysis and decision-making. Its application … Continued

As a founder, you must be extremely wary of inaccurate valuations since they can deter investors, set unrealistic growth expectations, and lead to suboptimal decisions in key areas such as mergers and acquisitions (M&As). A great example of this would be Yahoo! passing on Microsoft’s $44.6 billion acquisition offer and then, in 2016, having to … Continued

When a company becomes successful, investors may expect two types of yields. One is the yield that demonstrates development potential. This operational and performance-based development can be rewarding for certain types of investors. Similarly, the yields that promise the investors definite and stable income regularly make certain other groups of investors feel rewarded. These investors … Continued

Assigning a valuation to early-stage startups is particularly difficult because there is little to no financial history and their products are not market-tested. Instead, these valuations are based on the early-stage startup’s potential, which can be highly speculative. As a result, they may have higher valuation multiples than better-established companies or even other startups for … Continued

Last Updated: January, 2025 One financial valuation statistic used to compare the current market value of a company to its book value is the Price to Book Ratio (also known as Market to Book Ratio). The book value is equal to the company’s net assets and is derived from the balance sheet. In other words, … Continued

The root cause of the failure of 65% of start-ups is due to founder conflicts. Issues like executive misconduct, conflicts of interest, and mismanagement of resources are often the roots of shareholder disputes. A common flashpoint within these disputes is a financial reporting dispute, where disagreements arise over the accuracy, transparency, or interpretation of a company’s … Continued

Last Updated: 25 January, 2025 Anyone who’s been in the investment market long enough will be aware of the many valuation tools that are used. Each one considers different valuation parameters and has its merits and demerits, but none of them are used on its own. Only the best professional analysts know the right combination … Continued