Getting your M&A and financial due diligence game up

Updated: Jan 3, 2019

Valuing companies in the world of digital can be dizzying. To begin with most startups offer up limited financial records, against often lofty future projections. Historic deals have been at multiples of MAU, GMV, gross booking revenue, net revenue; in fact there are endless creative possibilities that seem to be ever evolving! We fundamentally believe the value paid by an acquirer has to supported by a clear value creation thesis through value chain synergies and unlocking new growth opportunities. That is the approach we take in our support to clients.

One could argue that current valuations in the tech sector are "frothy". This is a global phenomenon, take companies like Netflix, Amazon, Uber, Tesla, to name a few;


Apple: a case study in volatile market valuations

As at end December 2018, Apple stock has been hard hit by the overall market correction, tumbling some 37% from its top. Some say it is this an attractive buy, and in fact relatively cheap compared to its relative peers. At this time AAPL is US$146. While this may the case, it belies the fact that there may be choppy waters ahead for Cupertino. It recently announced it would stop disclosing detailed IPhone sales presumably because the numbers don’t look very good and are expected to worsen going forward. As prices for iPhones have crept up this past year, there is expectation of longer upgrade cycles by consumers. And while it has of late been touring its aspiration to grow services revenues it has yet to show strong traction if compared to incumbent services players like Netflix and Google.


Aswath Damodaran

“Einstein was right about relativity, but even he would have had a difficult time applying relative valuation in today's stock markets.”

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John Templeton

“Bull markets are born in pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell... If you want to have a better performance than the crowd, you must do things differently from the crowd.”


Aswath Damodaran

“Einstein was right about relativity, but even he would have had a difficult time applying relative valuation in today's stock markets.”

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