Basics of valuation

1. Basics of valuation 3 rd December 2010 R. Natarajan Chief Operating Officer Helion Advisors

4. What is valuation?

5. Its all about perception Rs 1500 Rs 15,000 Rs 50,000 Rs 150,000 Rs 350,000

20. SFAS 157… Preference of approach depends upon relevant circumstances!! Valuation techniques Market approach - Uses prices and information generated by market transactions involving comparable assets/ liabilities Income approach - Converts future amounts to a single present discounted amount Cost approach - Amount currently required to replace service capacity of asset

21. SFAS 157 Levels of inputs Level 1: Observable market prices Level 2:Observable prices other than quoted prices Level 3: Unobservable inputs Quoted prices for similar assets and liabilities in active markets Quoted prices for similar assets and liabilities in inactive markets Observable inputs other than Quoted prices Inputs derived from / that can be corroborated by observable market data Entity’s reporting data Unobservable interest rates in a specified currency (related to foreign currency swaps)

22. Enough of theory and books let us move to some reality check

23. Valuation at different stages of business Start up Mid Stage Growth Team Team Performance Potential Performance Potential Potential

24. Valuation at different stages of business Linear Growth Non Linear Growth

26. “ Convertibles a win-win situation”

27. “ $50M valuation offered by investor can be expensive than $30M asked by entrepreneur” “ Understanding the technicalities and other conditions of valuations is equally important”

30. Thank You