Startup Funding Espresso – Valuation Method for a Secondary Sale

Valuation Method for a Secondary Sale Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. In pricing a secondary sale here are some valuation techniques: Estimate the value of the equity by multiplying the revenue by the multiple for similar companies. For example, SaaS companies are sold for a multiple of 10X revenues. Reduce the value of any debt the company has. Divide the remaining value by the number of outstanding shares. Use their 409A analysis to compare to the number you calculated. Remember, 4o9A's tend to push the share price down to provide lower-cost stock options to employees. Other factors to include are time to exit and if the company is a candidate for an IPO or a buyout. Finally, look for any recent secondary share sales as a guide to setting the current price. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let's go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: http://investorconnect.org Check out our other podcasts here: https://investorconnect.org/ For Investors check out: https://tencapital.group/investor-landing/ For Startups check out: https://tencapital.group/company-landing/ For eGuides check out: https://tencapital.group/education/ For upcoming Events, check out https://tencapital.group/events/ For Feedback please contact [email protected] Please follow, share, and leave a review. Music courtesy of Bensound.