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
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Due diligence – get an edge when bidding by having the most accurate view of a target’s customer-base value and unit economics
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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
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Due diligence – go beyond the CBCV Express Analysis with customer acquisition forecast, complete revenue forecast, and sensitivity analyses
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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
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Due diligence – maximize future investment returns by having the most accurate and complete bottom-up valuation of a company
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Portfolio – track investment performance of a portfolio company and better understand the customer-based drivers of valuation over time
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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
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Identify hidden gems – companies with strong customer-base value, but are undervalued by conventional valuation approaches
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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
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Identify customer value red flags early in the process to minimize your investment risks
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Identify customer value improvement opportunities that could make the target particularly attractive
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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
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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
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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:
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Highly accurate predictive CLV and its trend over time, including a breakdown by customer segment, behavior, product, acquisition channel, etc.
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Distribution of CLV across customers to better understand overall customer acquisition and development potential
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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
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Accurately forecast a company's customer acquisition, retention, revenue, and profits
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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
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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)
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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:
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Forecasts of future customer acquisitions, retention, and spend
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Forecasts of future customer base size
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Forecasts of revenues generated from existing and future customers
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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
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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
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Perform CBCV valuations of portfolio companies on a regular cadence to track their performance over time
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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
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Obtain an accurate data-based view of the full company value
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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:
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Forecasts of future customer acquisitions, retention, customer base, etc.
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Forecasts of future revenues, profits, free cash flows, working capital, capex, and other components of valuation
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Sensitivity analysis by modeling various scenarios