- In the initial phase, when the goal is to validate the concept
- In the seed stage, when first investors enter
- For the later stages of raising new capital for growth purposes
- At exit
We have developed our own valuation methodology, because start-ups are considered to be very risky investments due to their lack of past financial results and in most cases, unprofitability. On the other hand they can generate high returns for investors in the future.
Risk free rate
Risk free rate is an important factor in the CAPM model. In the current market environment risk free rate can raise up many issues when coming up with the proxy for risk free rate. For the purpose of valuation, long-term projections for the company are usually prepared and in line with the long-term aim of estimating the value of a business, proxy for a long-term risk free should also be used. Using a long times series of nominal yields of AAA-rated government bonds or applying expected real interest rates with expected inflation, should be the appropriate way for estimating risk free rate used in the CAPM model for the purpose of business valuation.
Lecture on Business Valuation
Dean Mikolic gave lecture on Business Valuation at The Association of Corporate Treasurers Slovenia.
Challenges when valuing insurance companies in SEE region
Financial institutions (including insurance companies) differ from other, non-financial companies in many factors. Therefore their valuation has its own specifics compared to valuation of other companies. When valuing insurance companies from SEE region appraiser faces some additional challenges as well.
Beta impact on valuation
Part 4 concludes the series, which was focused on beta estimation. Part 4 sums up how different decisions and market conditions impact beta estimation, which can have an importat impact on the estimated value of a company or asset.
Illiquid markets and thin-trading effect on beta estimates
Markets of Southeast Europe are significantly more illiquid when compared to the markets of West Europe and USA. This illiquidity can have an important impact on the estimated beta. In Part 3 an impact of illiquid markets on beta is analyzed.