To read more about the Scorecard Valuation Method, click here.The Comparable Transactions Method is really just a rule of three.Things that counts for a liquidation value estimation are all the tangible assets: Real Estate, Equipment, Inventory…Everything you can find a buyer for in a short span of time.Initial value is determined as the average value for a similar box in your area, and risk factors are modelled as multiples of 0k, ranging from 0k for a very low risk, to -0k for a very high risk.The most difficult part here, and in most valuation methods, is actualy finding data about similar boxes.Note that according to Berkus, the pre-money valuation should not be more than M.The Berkus Method is meant for pre-revenue startups. The Risk Factor Summation Method or RFS Method is a slightly more evolved version of the Berkus Method.
If a startup really had to sell its assets in the case of a bankruptcy, the value it would get from the sale would likely be below its book value, due to the adverse conditions of the sales.
The Risk Factor Summation Method is meant for pre-revenue startups.
To read more about the Risk Factor Summation Method, click here.
Let’s say you are projecting cash flows over n years. This is the question addressed by the Terminal Value (TV)Option 1: you consider the business will keep growing at a steady pace, and keep generating indefinite cash flows after the n years period.
You can then apply the formula for Terminal Value : : TV = CFn 1/(r- g) with “r” being the discount rate and “g” being the expected growth rate.
First, you determine an initial value for your box.