IB Interview Case Study Type Question

How would you walk through the below case? 

Background: You have a 100% SaaS revenue business crossing the $100M revenue threshold. Growing 30-35% a year pretty consistently, and around breakeven from a cash flow perspective. Management is investing in the business and building international capabilities. Re-investing the internal generating cash flows so you are break even on an EBITDA basis. Gross margins are high 70%s. 77-78%. Thinking about strategic alternatives and the CFO wants to understand valuation of the business.

Question 1: What would be the valuation range you would guide them to? (Note: you have to guide toward a range / number)

We then get hired and pull together an MP, financial model, data pack, etc. CFO calls you one day and then says we just had a revenue opportunity come in this week. Extra $1M subscription revenue that will start Oct 1. I feel so good about all the work we did over the past 6 weeks. This wasn’t in the pipeline when we analyzed it a week ago. Let’s just keep everything as we have and add $1M more to the model.

Question 2: You have a monthly financial model. Talk me through the impacts to the 3 statements. Bill 30 days in advance. Get paid Nov 1. Walk through how you build in this extra $1M contact into the forecast. (Hint: Helpful if you utilize timeframes for each of the accounts starting with Oct 1. When do you recognize revenue, etc?)

1 Comments
 

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