Appeals Case Highlights Critical Buy-Sell Agreement Issues

Executive Summary Business owners and their professional advisors should review corporate agreements to ensure buy-sell provisions are not out of date and will work as intended. Common traps related to the valuation process and buy-sell agreement language – which often lead to costly shareholder conflicts – are highlighted in a recent appellate court decision. Using … Continued

The Factors That Drive a Startup Valuation

An In-Depth Interview with Redwood Valuation Director Tim Montgomery   Redwood Valuation’s Director Tim Montgomery recently sat down with the founder of WatchPitch, Trey Scott, to provide a behind-the-scenes look on what goes into the valuation of a venture-backed company. Tim discusses the numbers that matter – revenue growth, funding, cash runway – and also … Continued

Everything You Wanted to Know About Purchase Price Allocation

The following interview was conducted with Redwood Valuation’s Tim Iversen, Director (ASA). Tim has nearly 20 years of experience in business valuation during which time he has completed over 700 valuations for both public and private companies. What is a purchase price allocation? It is the process of assigning a fair value to all the … Continued

A Fund’s Guide to ASC 820 Portfolio Valuations

  The teams that manage the finance function of an investment fund have a lot on their plate. And that is especially true around the quarter- and year-end stretch. It is enough of a challenge to monitor and communicate with portfolio companies, to prepare for partner meetings, and to properly close-out the books. Adding the … Continued

WeWork Was Never “Valued” at $47 Billion

  The unraveling of the coworking company WeWork’s initial public offering (IPO) has been well-covered in the media and blogosphere. Various outlets dissected WeWork’s initial registration statement (S-1) back in August. Then the drama began: Slowly at first, then seemingly all at once. One element of the story, however, has been poorly covered by the … Continued

What Your Cap Table Must Have

Capitalization tables – “cap tables” for short – are tools used by startups to track ownership in their company. At Redwood, we work with thousands of cap tables for our valuation engagements every year. We receive – and decode – all types and variations, from highly detailed Excel workbooks to back-of-the-napkin scribble from busy founders. … Continued

What Is Equity in Business?

  What is equity in business? It is a question whose answer every small business owner would do well to understand. 77% of small businesses rely on personal savings to get off the ground, and more often than not, those personal savings are life’s savings. When everything you own is on the line, equity must … Continued

Is Carta’s Pre-Money Valuation Reasonable?

In December 2018, Carta announced a Series D preferred financing round raising $80M and valuing the Company at a Pre-Money of $800M. As valuation specialists, we wanted to take a deeper dive into the metrics surrounding this latest financing. Based on public information, we estimated Carta’s revenue for 2018 to be roughly $25M, which implies … Continued

Will eShares be able to continue to support Silicon Valley Bank Analytics valuation clients after acquisition? [Updated September 21st 2017]

eShares has officially “purchased” SVB Analytics and wrote a surprising blogpost with several strange and potentially alarming comments about the acquisition. Here are our key reflections on eShares’ blog post: Arbitrary Deadlines – In the press release, eShares gives an arbitrary and very short deadline for previous SVB valuation clients to sign up with them … Continued

Downside of Venture-Backed Common Investments

Raising common stock for first rounds of venture investments can have large, unintended consequences on employee compensation and common stock valuations, especially for 409a valuations.  The Boston Business Journal released an article discussing how Jamie Goldstein’s new fund, Pillar, hopes to better align the interests of management and investors by purchasing common stock instead of … Continued