A proposed capital raise
Examine the assumptions behind an investment discussion, including funding needs, milestones and the rights offered to investors. A valuation can provide context without promising that a raise will complete at that price.
Valuation service
Start-up, capital raising and employee equity valuations
Early-stage businesses often have limited trading history and significant uncertainty about future performance. Their equity can also include different share classes, options and investor rights. A useful valuation starts by separating the questions: the value of the business, the instrument being valued and the purpose of the assessment.
When it is useful
Decisions this valuation can support
Employee shares and options
Identify the instrument, date and intended tax or accounting use. An ordinary share, option and preference share may require different analysis because their economic features differ.
Changes in capital structure
Assess the effect of new securities, conversions or revised rights on the interest being valued. A current capitalisation table is essential to define the subject accurately.
Evidence and methods
How the value is assessed
Where forecasts have a reasonable basis, cash-flow and scenario analysis can help examine possible outcomes. Relevant financing or market evidence may provide another reference point, after considering differences in rights and timing. Options may require an instrument-specific model. A recent headline funding valuation should not automatically be applied to every security.
Read about our valuation approach and Calvin Lim’s experience.
Information we may need
- Current capitalisation table, share-class rights and outstanding instruments
- Recent investment documents, term sheets and subscription agreements
- Business plan, forecasts and the assumptions behind revenue and costs
- Cash position, funding runway and expected future capital requirements
- Employee equity plan rules, grant details and vesting conditions
- Commercial milestones, customer evidence and product-development information
What the work can deliver
The agreed report can explain the instrument, date, purpose, capital structure, methodology, important assumptions and conclusion. Scenario or sensitivity work can make the effect of uncertainty visible. State whether the work is for a transaction, employee share scheme tax purpose or financial reporting, because these requirements can differ.
Scope, fees and timing
Multiple share classes, complex terms, uncertain forecasts and the number of instruments or grant dates influence the work required. Early access to complete plan and investment documents helps identify the appropriate scope. Changes to terms during the engagement may require the analysis to be revisited.
Related support
Explore connected valuation services
Real-property valuation, tax advice and legal advice require appropriately qualified advisers. Any reliance on other specialists is agreed within the engagement scope.
Practical questions
Frequently asked questions
Does a start-up automatically qualify for an employee share scheme concession?
No. Eligibility depends on the applicable requirements and facts. The ATO provides approved valuation methods for qualifying circumstances, but suitability and eligibility need to be checked with your tax adviser.
Can the latest investment price value employee ordinary shares?
It is relevant evidence, but the securities may have different rights or the valuation may relate to a different date. Those differences should be assessed before the price is used.
Is an employee equity tax valuation also an accounting valuation?
Not automatically. AASB 2 addresses share-based payment accounting, while employee share scheme tax rules serve a different purpose. Identify both requirements at the start if the work needs to support more than one use.
Discuss the purpose of your valuation
Tell us the interest involved, the intended use and any deadline. We can then discuss scope and the information needed.