A US-Based Start-Up Raised Capital Based On The Fair Valuation And The Business Plan Delivered By ValueAdd’s Valuation Experts

About Client:

BBA is a manufacturer of air conditioning cleaning system and also a service provider for centralized air-conditioning systems of various large commercial real estate projects across the US, Europe and GCC. They serve commercials, hospitals, schools, hotels, stadiums, and universities.

BBA had just launched their Start-up with a patented air-conditioner cleaning technology in the US. This patented process makes it possible to penetrate through any depth of heat transfer coil within the commercial HVAC system.

And they were planning to raise capital. They approached ValueAdd for building a fair business valuation for the same.

Business Problem:

The founder, management team and the technical team were more than capable to expand business. However, for capital raising they needed financial and valuation experts who can help build a business plan, a fair valuation of their business, at an optimal cost, and within a reasonable timeframe.

They didn’t prefer to hire an investment banker so early, as they weren’t sure of the right valuation; and didn’t want to burn cash beforehand. Hence, they approached ValueAdd to help.

ValueAdd Solution:

ValueAdd deputed an equity senior analyst and an associate, with a vast valuation experience of complex businesses and start-ups. Most Start-ups lack systems, processes, sophisticated accounting and record-keeping systems, and understanding of valuation! Our team had worked with founders/promoters and CXOs and knew how to guide them to achieve our end result – an accurate and fair valuation of the business.

Detailed Business Plan with breakeven analysis:

  • Our valuation experts prepared a detailed business plan of the firm, based on the market study, commercial feasibility of the patented product, and company’s business strategies.
  • As per the business plan, they could be breakeven in 2nd year of the operations, due to its innovative product.
  • Innovative product and sound founding team were the key advantages of the firm.

Fair business valuation:

  • The firm’s revenue had two streams, 1) royalty from the patented product and 2) air-conditioning servicing. The major cost was the service engineers and the materials required.
  • The DCF valuation was more scientific due to simple business model and clean disclosures.
  • However, the relative valuation (trading comps and deal comps) helped validate the valuation range. A football field provided more accurate range of valuation that they could expect for the business.

Investor Presentation and a Teaser:

  • Prepared a Teaser and an investor presentation for their road show in the US.

Benefits Delivered:

  • The firm could secure US$100 mn funding in their road show in the US
  • The founder benefitted due to minimal dilution of the stake due to the patented technology – had built the valuation, accordingly!
  • We received a contract to build a valuation for an entity in UAE who wanted to tie up with BBA for offering the service in GCC!
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