Valuation of loss-making Company and potential peers

Hi everyone,
Wondering what you feel are the best methods to value a company that is loss-making for the next 4y (still trying to figure out margin run-rate after that) in the Saas space?

Thinking of going TAM -> % penetration -> steady state margins -> cash conversion
Don't have much info (nor enough time) to do a proper DCF

Should I look at LTV/CAC as well?
What other metrics/methods do you recommend?

Also, although this company sells subscriptions for software, it effectively has to install hardware from a third party to do so. (Think about selling editing services to a client but having to install a Canon camera at the sight beforehand).

Are there any good public peers out there for such a company?

Many thanks in advance!

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (2)

Most Helpful
  • VP in IB-M&A
Oct 14, 2021 - 1:52pm

You don't need a DCF, just do a discounted future IPO. Projecting out TAM and % penetration is a good start. Go out as many years as you need to for your Revenue growth rate to drop to levels where you actually have comps to use, i.e., no point trying to put a multiple on the business if you're still growing 200% because you won't have comps that are growing 200% to grab a multiple from. Go out until you have 30-50% growth and then grab Rev multiple from public comps growing >30% (which is probably 35-40x NTM Rev). No need to bother with LTV/CAC for something like this, too much precision. I would just take a guess at what you think your EBITDA margins are at that point and select a sub-set of your comps that are growing >30% and have EBITDA margins in the range you think. 

That'll get you a future EV at the time of IPO. And then bring that back to PV at a range of venture discount rates e.g. 20%, 30%, 40%. No CAPM WACC for this stage. 

Don't think there are any public comps that are sufficient high growth and have a mixed hardware software model. Maybe a Peloton but that's consumer and I assume you're talking about enterprise. Fine to use software comps but maybe pick some of the lower gross margin guys

Oct 15, 2021 - 4:04am

Sint voluptatem laboriosam voluptatibus magnam. Fugit magni in maiores ipsa cum atque minima est. Fugit fugit repudiandae voluptatem autem ea voluptas.

Quis officiis ut tempore odio. Ad qui deleniti mollitia consequatur. Asperiores et perferendis architecto a quia corrupti ratione. Corrupti accusamus velit aut quas qui. Cumque molestiae nihil dolorem enim laborum nesciunt. Mollitia culpa voluptas quisquam necessitatibus. Id et in nisi facere modi.

Quibusdam blanditiis possimus aut vel. Sint sit dicta quis. Vero eveniet ratione rerum. Consequatur omnis ut aliquam totam excepturi tempore. In unde in labore eius.

Start Discussion

Total Avg Compensation

October 2021 Investment Banking

  • Director/MD (10) $853
  • Vice President (39) $363
  • Associates (228) $232
  • 2nd Year Analyst (137) $154
  • 3rd+ Year Analyst (30) $147
  • Intern/Summer Associate (103) $143
  • 1st Year Analyst (500) $135
  • Intern/Summer Analyst (386) $83