Growth model

In the prior lesson, I walked through employee option pools. In that lesson, we modeled options as being issued POST-MONEY (after the investment occurs). This is the primary way to model them, since it is most common in practice. However, if you’d like to understand what the cap table would look like if we issued …

8b. Pre-money vs post-money options Read More »

In the video on Net Operating Losses, the calculations that I describe from minute 17 to minute 22 require correction! In the video, my calculations assume Deferred Tax Asset can only GO DOWN over time, which is incorrect and was an error on my part! Here’s what need to know Deferred tax assets Formula to remember Correcting the …

20. Update to net operating losses Read More »

Alright, alright, alright! I’m excited you’ve made it here! In this chapter, we get into the good stuff. We’ll dive into all the financial modeling techniques that are specific and highly relevant to growth stage investing. Many candidates are surprised that, although they are highly experienced in buyout/LBO modeling, how many of these techniques are …

Chapter kickoff Read More »

FAQ: If multiples are higher today than they were in the past, why don’t we adjust UP our exit multiple, instead of DOWN? The average multiple in the sector for the current quarter is 13.3x. This is indeed a premium to the 5-year cycle average of 9.1x. In this example, we look at the 5-year …

17. Valuation Read More »

Key takeaways FAQ: What are the definitions? Pre-money equity valuation refers to the equity value of a company immediately BEFORE the transaction. This valuation provides investors with an idea of the current value of the business, which then lets you determine the VALUE OF EACH SHARE. Pre-money valuation = Transaction enterprise value – net debt …

4. Pre-money, post-money valuation Read More »

**Correction** In this section, there is a small error from minute 17 to minute 22 (roughly) involving how Deferred Tax Assets are projected going forward on the balance sheet and cash flow statement. I’ve included a short correction lesson at the end of the Growth Model section. If you are following along with each lesson …

9. Net operating losses Read More »

FAQ: The model’s balance sheet no longer balances if I add new debt in the transaction. Why does this happen? If you use the model as currently set up to RAISE NEW DEBT in addition to the other stuff going on, then implicitly you are modeling a SHARE BUYBACK by the company. You are reducing …

7. Minority vs. control – (Part 2) PF BS, exit proceeds Read More »