Valuation Methods

In order to calculate the value of a growing company, numerous factors have to be taken into account and a comprehensive analysis has to be performed. In addition to quantifiable factors, non-quantifiable “soft” factors critical for an accurate valuation must be assessed. The analysis of these factors is mainly based on the following:

• The management
• The market
• The science and technology

The management, market, science and technology are systematically evaluated, described and further developed to generate a comprehensive risk assessment that is used as a basis for the valuation.

Valuations are performed using a variety of accepted and proven methods, providing insight from differing perspectives. Methods most appropriate to the circumstances of the company are used and are typically a combination of the following:

• Discounted cash flow (DCF) method
• Risk-adjusted Net Present Value (rNPV) method
• Venture capital method
• Market comparable method
• Comparable transactions method
• Decision Tree valuation / Real options method

Detailed information on the methods employed can be found in the book: Frei, P., Assessment and Valuation of high growth companies, Bern: Haupt Verlag, 2006 (also available on Amazon.de).