For growth equity, private equity, and venture capital firms, Customer-Based Corporate Valuation services add value at every stage of the investment process

CBCV Solutions for PE/VC Firms

CBCV Express Analysis

Quick CLV-based analysis of a company summarizing the most important customer value insights and unit economics

When to use

  • Due diligence – get an edge when bidding by having the most accurate view of a target’s customer-base value and unit economics

  • Portfolio – enable direct comparability ("apples to apples") across portfolio companies and over time

CBCV Deep Dive

Holistic CLV-based evaluation, analysis of growth prospects, and customer + financial forecast for a portfolio company or potential investment 

When to use

  • Due diligence – go beyond the CBCV Express Analysis with customer acquisition forecast, complete revenue forecast, and sensitivity analyses

  • Portfolio – forecast portfolio companies' customer base and revenue growth, and increase valuation by focusing on customer value

CBCV Valuation

Comprehensive customer-based valuation of a potential investment or portfolio company

When to use

  • Due diligence – maximize future investment returns by having the most accurate and complete bottom-up valuation of a company

  • Portfolio – track investment performance of a portfolio company and better understand the customer-based drivers of valuation over time

  • Exit – maximize return on investment when exiting a portfolio company by more effectively communicating the full valuation of your customer base

 

CBCV Express Analysis

What it is

Quick CLV-based analysis of a company summarizing the most important customer-base value insights and unit economics

When to use

  • Due diligence

  • Portfolio

Due Diligence

Get an edge when bidding by having the most accurate view of a target’s customer-base value and unit economics

  • Identify hidden gems – companies with strong customer-base value, but are undervalued by conventional valuation approaches

  • Avoid “lemons” – companies that appear promising based on surface-level metrics (e.g., strong topline growth), but have poor underlying unit economics and therefore weak longer-term prospects

  • Identify customer value red flags early in the process to minimize your investment risks

  • Identify customer value improvement opportunities that could make the target particularly attractive

  • Demonstrate immediate value-add to a company’s management team by sharing actionable insight from the analysis

Portfolio

Enable direct comparability ("apples to apples") across portfolio companies and over time 

  • Diagnose customer value: estimate CLV and its trends, CLV to CAC ratio dynamics, CLV by customer segment, product, acquisition channel, and more – in a unified manner across the entire portfolio

  • Identify customer value improvement opportunities, e.g., by reallocating marketing budget towards more effective customer acquisition channels and better customer retention/development tactics

Insights you will get

Summary of strengths and weaknesses of the analyzed company from a customer value lens along with key customer value insights:

  • Highly accurate predictive CLV and its trend over time, including a breakdown by customer segment, behavior, product, acquisition channel, etc.

  • Distribution of CLV across customers to better understand overall customer acquisition and development potential

  • CLV to customer acquisition cost (CAC) ratio to estimate company’s marketing ROI and identify opportunities to reallocate marketing budget to improve efficiency

Investor's interactive dashboard to drill down into key segments of the customer base and gain deeper insight into the company's sources of customer value

 

CBCV Deep Dive

What it is

Holistic CLV-based evaluation, analysis of growth prospects, and customer + financial forecast for a portfolio company or potential investment 

When to use

  • Due diligence

  • Portfolio

Due Diligence

Go beyond the CBCV Express Analysis with deeper insight into a company's future growth

  • Accurately forecast a company's customer acquisition, retention, revenue, and profits

  • Perform sensitivity analysis of future company growth to various assumptions

Portfolio

Forecast portfolio companies' customer base and revenue growth, and increase valuation by focusing on customer value 

  • Accurately forecast and compare each company’s future size of customer base, revenues, profits, etc., based on detailed predictions of customer behavior (acquisition, retention, repeat purchasing, spend)

  • Identify customer value improvement opportunities, e.g., by reallocating marketing budget towards more effective customer acquisition channels and better customer retention/development tactics

Insights you will get

All insights provided by the CBCV Express Analysis, plus:

  • Forecasts of future customer acquisitions, retention, and spend

  • Forecasts of future customer base size

  • Forecasts of revenues generated from existing and future customers

  • Sensitivity analysis by modeling various scenarios

 

CBCV Valuation

What it is

Comprehensive customer-based valuation of a potential investment or portfolio company

When to use

  • Due diligence

  • Portfolio

  • Exit

Due Diligence

Maximize future investment returns by having the most accurate and complete bottom-up valuation of a company

  • Identify undervalued and avoid overpriced companies

  • Ensure that bidding reflects true value of the company and firm’s target profitability

Portfolio

Track investment performance of a portfolio company and better understand the customer-based drivers of valuation over time

  • Perform CBCV valuations of portfolio companies on a regular cadence to track their performance over time

  • Obtain an independent third-party evaluation of the validity of current management forecasts, CLV estimates, and other key investment metrics in a unified way across the entire portfolio

Exit

Maximize return on investment when exiting a portfolio company by more effectively communicating the full valuation of the customer base

  • Obtain an accurate data-based view of the full company value 

  • Account for sources of company value usually ignored by traditional valuation methods (for example, customer heterogeneity; see an example of how you can undervalue a company by 50%+ by ignoring differences across customers)

Insights you will get

Company valuation report and the CBCV valuation model based on predicting future customer behavior, including:

  • Forecasts of future customer acquisitions, retention, customer base, etc.

  • Forecasts of future revenues, profits, free cash flows, working capital, capex, and other components of valuation

  • Sensitivity analysis by modeling various scenarios

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