Examples of Our Work [Business Valuation]

Valuing Shares of a Startup

Valuations of startup companies can change quickly, especially when the company is hot and in a rapidly developing industry.

Engagement
A fast-growing telecommunications startup with plans to quintuple in size issues shares of common stock to attract, retain and compensate key employees. Gleason & Associates was hired to conduct an independent valuation of the company's common stock that would withstand the scrutiny of independent auditors and the IRS.

Gleason's Role
Although the valuation assignment seemed straightforward, before we could determine the value, if any, in the common stock, we had to analyze the value of the company as a whole and also the value of its preferred stock. Using the company's financial projections, we performed a complex discounted cash flow analysis that considered the anticipated amount and sources of available capital and their impact on the value.

Results
Because the company will be required to continue to raise additional funds in the future and distribute returns to preferred shareholders first, the value of the common stock was determined to be nominal in the early stage of the company's lifecycle. However, the values can be expected to change rapidly as the company staffs up, gains customers and generates revenue and positive cash flow from operations. To enable the company to comply with financial statement audit and IRS requirements and also continue to attract and compensate key employees competitively, Gleason & Associates will work with the company to conduct a fresh valuation analysis every six months.