Project example - Software & Services Business Valuation

Consultant Richard Burroughs advised the owner of StrucSoft, an AEC software and services business, on how to liquidate his interest as an owner. The founder had been approached by a strategic and was uncertain as to the value of his business.

Burroughs delivered to the owner a valuation analysis, assessment of key SaaS metrics, transaction and trading multiple comp study, and an executive deal memo. Burroughs successfully guided StrucSoft’s owner to achieving a premium valuation in an accepted counteroffer.

CONSULTING PROCESS:

Burroughs worked directly with the owner and his controller to pull historical financials covering the previous three fiscal years. In addition to financial analysis, Burroughs worked privately with the owner to understand his personal considerations and desires for an exit.

Burroughs used the historical financials to develop a three-year historical cashflow statement and a five-year forward projection, both of which constituted the foundation of a discounted cash flow model.

Multiples and other valuation assumptions were developed through a study of transaction and trading comps and interviews with other financial professionals.

Valuation was determined using a number of methods, including DCF and LTM, FTM revenue and EBITDA multiples. The resulting enterprise values created a “field” for a valuation, which corroborated our findings and led to a supported enterprise value. Richard ran a variety of sensitivities to show management what the value of their equity would be given different business performance scenarios.

Deliverables included:

Financial analysis and valuation

Scenario planning and strategic guidance for an exit

Executive summary memorandum

SaaS Metrics Scorecard

Results:

Burroughs gave the owner a clear understanding of what his business was worth and how he should respond to the initial LOI from a potential corporate buyer, resulting in a satisfactory and accepted counter offer. StrucSoft successfully closed its deal in spring of 2021.