Theta Equity Partners

CBCV Solutions for PE/VC Firms

What it is

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

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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

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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

What it is

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

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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

What it is

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

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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