Was wondering if someone could explain how they went about modeling for currently unprofitable software companies focusing on growth. If given only public information, I’m finding it hard to project not only growth but also how much to scale back on operating expenses. Appreciate any help or examples.
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Projecting growth is tricky with only public info. Can approx looking at numbers for clients, churn, average revenue per client etc - also look at competitors to benchmark. Use a bit of reasonableness esp vis-a-vis market size and competition
For opex, again benchmarking, but against both direct competitors and other mature saas companies would be a good idea
For debt level, can check filings of latest lbos (BX CVENT, Thoma deals) in the last 10 months or so would give you a fair idea - one tip-off - seller financing and management rollover has become a major component
Seller financing usually prominent in sponsor to sponsor deals? If so, is it because previous sponsor needs an exit?
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