- A few examples (3-4) of recent acquisitions in your space showing names, valuations, revenues and resulting multiples in each case.
- Show an average, perhaps adjusted for outliers or special cases.
- If acquisitions of companies like yours do not exist (seldom the case) use the closest proxies you can reasonably find
- Using the data above, make a supported claim of your valuation under similar circumstances based on the revenues projected at time of exit
- Calculate the investors’ projected return based on the % of your business that you offer to trade for the desired funding. Note: This simple extrapolation works if you project a single funding event to take you to the exit. If future rounds are contemplated, you have to adjust the analysis for dilution from those events.
- Do not explain the logic in the slide, do that verbally. The slide only summarizes the data the audience needs to follow your explanation.
Note: My post AngelCalc elaborates these concepts further and includes a working calculator to do the math for you. Be sure to understand the use of the factor “Probability of success” as it reflects the maturity of your venture. If pre-, or nominal revenue, probably no adjustment is needed. AngelCalc can also be a test for the attractiveness of the terms you offer vis-à-vis investors’ likely expectations.