Private Equity & Venture Capital Valuation

Estimate the value of a company using methods tailored for private equity and venture capital investments.

About Private Equity & Venture Capital Valuation

Valuation in Private Equity (PE) and Venture Capital (VC) is critical for making informed investment decisions. PE focuses on stable, cash-generating businesses, often using Discounted Cash Flow (DCF) analysis. VC targets high-growth startups, commonly using the Venture Capital Method or ARR multiples for SaaS companies. This calculator supports three methods:

• Discounted Cash Flow (DCF): Estimates intrinsic value by discounting future cash flows, suitable for PE investments.
• Venture Capital Method: Calculates pre- and post-money valuations based on expected exit value and target ROI, ideal for VC.
• ARR Multiple: Values SaaS companies based on Annual Recurring Revenue, with adjustments for control premiums or illiquidity discounts.

Input Fields

Select a valuation method and provide the required inputs:

• Valuation Method: Choose DCF, VC Method, or ARR Multiple.
• DCF Inputs:
  • Free Cash Flows (Years 1-5): Projected cash flows after operating expenses and capital expenditures.
  • Risk-Free Rate (%): Yield on risk-free assets (e.g., 10-year Treasury).
  • Market Return (%): Expected market return (e.g., S&P 500 long-term average).
  • Beta: Measure of the company’s market risk.
  • Debt: Total debt of the company.
  • Equity: Total equity value.
  • Tax Rate (%): Corporate tax rate.
  • Growth Rate (%): Perpetual growth rate for terminal value (or use exit multiple).
  • Use Exit Multiple: Check to use an EBITDA multiple for terminal value.
  • Exit EBITDA Multiple: Multiple applied to last year’s EBITDA (if using exit multiple).
  • EBITDA Last Year: Last year’s EBITDA (if using exit multiple).
• VC Method Inputs:
  • Expected Exit Value: Anticipated company value at exit (e.g., acquisition or IPO).
  • Target ROI: Desired return multiple (e.g., 10 for 10x).
  • Investment Amount: Amount to be invested.
  • Exit Horizon (Years): Time until expected exit.
  • Dilution Factor: Fraction of value retained after future funding rounds (e.g., 0.8 for 20% dilution).
• ARR Multiple Inputs:
  • Annual Recurring Revenue (ARR): Annualized recurring revenue from subscriptions.
  • ARR Multiple: Valuation multiple applied to ARR (e.g., 10 for 10x).
  • Control Premium (%): Additional value for controlling stake (optional).
  • Illiquidity Discount (%): Discount for lack of marketability (optional).