Don't leave millions on the table

You're being pressured to accept terms based on a valuation model that doesn't add up. We identify the weaknesses in your counterparty's analysis so you can defend your position with confidence.

Case Study: Increasing PPS by 2.5x

The Client:
The founder and early investors of a clinical-stage biotech company that had previously sold a controlling interest to an outside party.
The Situation:
The company was running out of cash and needed capital to fund pivotal studies. The majority shareholder offered to provide all the capital, but at a valuation that felt punitively low to the founder and early investors.
The Anchor:
The majority shareholder presented an operating model to the board, which was then used as the basis for a 409A valuation prepared by a major accounting firm. This 409A valuation became the anchor for the proposed deal terms.
The Problem:
Our client felt the resulting valuation was artificially and unfairly low, but couldn't pinpoint which specific assumptions or calculations were driving the outcome.
Our Analysis:
We conducted a forensic review of the model and identified multiple material errors:
  • Incorrect cash flow calculation driving artificially low unlevered free cash flow
  • Incorrect discount rate calculation leading to discount rate that was 33% too high
  • Incorrect peak sales calculation understated peak sales by 25%
  • Incorrect time-to-peak calculation that delayed projected peak sales by several years
  • Several additional material errors in the financial projections
These were issues of material fact, not subjective judgment calls. We also validated our proposed fair value with comparable company analysis.

The original 409A model suggested a price per share that was 5.5x lower than the fair value identified in our analysis.

Armed with our detailed report, the founder successfully negotiated a deal at a price per share that was 2.5x higher than the original 409A valuation, preserving millions in equity value for early stakeholders.

Price per Share Bridge

$1.00
409A
+$1.50
Fix peak sales
+$1.20
Fix discount rate
+$1.10
Fix cash flow
+$0.70
Other errors
$5.50
Updated valuation

Illustrative example. Specific errors and values have been anonymized.

This case study has been anonymized. Details have been modified to protect client confidentiality.

Is this service right for you?

This service is only for special situations. In most fundraising negotiations, DCF models and comparable company analyses don't drive the final valuation. But in some cases, a formal valuation model becomes the legal or strategic basis for the terms being offered. When that happens, errors and biases in that model can cost you millions.

This may work for you if...

  • There's a formal valuation model (409A, fairness opinion, external audit, board-reviewed DCF) driving the negotiation
  • You're being pressured by existing investors in an inside round or down round
  • You suspect your counterparty is using different assumptions with different audiences
  • You're a minority shareholder facing a squeeze-out, drag-along, or forced transaction
  • You're in a secondary transaction, tender offer, or buyout situation

This is NOT for you if...

  • You're negotiating a standard round with new outside investors
  • There's no formal valuation model driving the terms
  • You need help finding investors or raising capital
  • You're looking for someone to negotiate on your behalf
  • The situation is adversarial litigation (we're not expert witnesses)
  • You need legal or accounting opinions

The Process

1. Initial Consult

Reach out to us with a brief description of your situation. We'll schedule a confidential call to understand the dynamics.

2. Fit Assessment

We assess whether this is a situation where forensic valuation analysis can help. If it's not a good fit, we'll tell you immediately. No cost for this stage.

3. Analysis

We analyze the valuation model being used in the negotiation. We identify errors, inconsistencies, extreme assumptions, and methodological weaknesses. We benchmark assumptions against industry norms and the company's own prior representations.

4. Deliverable

You receive a detailed report outlining the issues we identified, an alternate model that addresses those issues, and specific talking points you can use in negotiations.

5. You Negotiate

It's up to you to use this information in your negotiation. We provide the analytical firepower: you control how and when to deploy it. We do not negotiate on your behalf.

Important Limitations

We want to be crystal clear about what we don't do:

We are not broker-dealers. We are financial analysis consultants.
We do not help you find investors or raise money for your company.
We do not negotiate on your behalf.
We do not provide legal opinions or serve as expert witnesses in litigation.
We do not perform accounting or audit services.
We do not provide fairness opinions or valuations that would be subject to professional standards for such opinions.
We are not investors. We don't buy or sell securities on behalf of clients.
We are not fiduciaries. Our role is limited to forensic analysis of valuation models.

If you need any of these services, we're happy to refer you to appropriate professionals.

Is this your situation?

If you're facing a high-stakes negotiation where a valuation model is driving the terms, reach out for a confidential consultation. We'll assess your situation within 24 hours and tell you honestly whether we can help.

Schedule a Consultation