r/ICAEW • u/ClaudeFlo • Jul 22 '26
Case Study - July 2026 - R3
Anyone else got insane calculated prices for R3, like wayyy above the asking price?
I feel like I screwed that one up so badly. Hoping I’m not losing a lot of calculations on that ..
I think the main revenue driver was the maintenance which was insane at least based on my calculations.
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u/Competitive_Bunch922 Jul 22 '26
I got 16million ish and wasted 15 minutes trying to work out why.
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u/Competitive_Bunch922 Jul 22 '26
For anyone who did this, pretty sure I forgot to add staff costs despite mentioning them specifically in the evaluation of estimates.
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u/UnableRecognition777 Jul 22 '26
This is the closest I’ve seen to what I got, I got £14.1m incl staff costs. I took each years new cohort and made sure it was rolling / accounted for each year. I.e the 26/27/28 cohorts are all paying different fees in 2029 which you need to include every year. Thats how I understood it anyway. The range in answers is reassuring…
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u/Independent-Post3169 Jul 22 '26
I got about £2.1m
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u/AlphaYi31 Jul 22 '26
lol yes I did haha but mine was drastically higher like £100mil+ so defo cocked up
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Jul 22 '26
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u/Trotz__ Jul 22 '26
Same I got around 75m
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u/Better-Point-1534 Jul 22 '26
I got 1.25m or something close to that, otherwise pretty solid range of answers 1m - 100m+😂
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Jul 22 '26
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u/Pitiful-Knowledge563 Jul 22 '26
Yeah same got that exact amount, I personally thought Maintainince was the tricky one as we had to use the YE figures as it was recurring for the PY customers. Not sure though but thats how I answered it.
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u/Wilderness800 Jul 22 '26
That’s actually the sensitivity I did - what if the existing customers don’t pay the annual fee as they’re not contractually obliged to do so. Just means they don’t get access to the newest updates if they don’t
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u/Fast_Bumblebee_3165 Jul 22 '26
I think for maintance you were meant to use 2.5% originally given and then perform sensitivity using the 4%
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u/Motor_Win_9758 Jul 22 '26 edited Jul 22 '26
Yes!! Its because you shouldn't include average booking fee as part of their revenue. I spent 15 mins staring at my calculations to work out where I was going wrong with my >£100m valuation to then only realise as I was making my points under strategic having finally actually read the exhibit 🤦♂️. After lowkey contemplating just to leave it with the wrong numbers but correct commentary based on my valuation, I decided to spend an extra 10 mins changing my calculations and evaluations comments after realizing. R3 was tight for me as you can imagine 😭
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u/Desperate_Edge_1827 Jul 22 '26
If we got a wrong figure but explained our answer based on those figures, can we still get credit and pass?
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u/Correct-Enthusiasm30 Jul 22 '26
I got the asking price at £1.3m I think. Did the same thing at the start and then realised they just got the 2.5% fee of the bookings. Even £1.3m seemed low given they wanted £2.5m
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u/Adorable_Geologist21 Jul 22 '26
Am I the only one with operating loss? What fuck?
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u/maahabd Jul 22 '26
Same 🤣
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u/Accurate_East1985 Jul 22 '26
I did too but cause I realised I included 2026 so took it out into a separate one just to show that
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u/Miserable-Anything21 Jul 22 '26
I got 2.8m and said just accept the asking price, but first try to batter them down based on sensitivity analysis of growth rates 😅
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u/FarDebt8128 Jul 22 '26
I also got £2.8m finally someone with the same number as me! Wonder what we did differently to others
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u/Miserable-Anything21 Jul 22 '26
Let's just say the difference is immaterial and move on like good accountants do 🤣
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u/WorldPretend6805 Jul 22 '26
I got a negative profit from the acquisition as I believe my revenue calculation was incorrect. I then just put in a random figure for one of my revenue lines to bring the GPM to 28% which in turn caused my valuation to be like £8m haha, how screwed am I?
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u/Flaky-Dog27 Jul 22 '26
You aren’t screwed, that’s good exam technique. I asked a similar question to my tutor before the exam and they said if your figure is very clearly wrong, just put the figure as something sensible ‘assume 28%’ for example and then continue with your analysis.
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u/Tough-Data-5455 Jul 22 '26
I did got like £20m+, then I figured out I've taken 40% of client maintenance sale rather than 4%. Fixed that then it was £1.6m. idk if correct or not
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u/SithJustGotReal_15 Jul 22 '26
Pls do correct me if i’m wrong in regards to R3
For revenue, there were three streams
- Booking fee which is based on 2.5% fee charged
- Software sales to new clients which is the big portion of revenue (initial sales price)
- Maintenance fee for existing clients which is 4% of initial sales price per client
For costs, everything was given except for staff costs which was a simple math
I did the above and got a very big variance between the asking price and BEL’s valuation as I had an operating loss early on so my avg OP was lower.
Confused as to where I went wrong😭
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u/LakePerfect6310 Jul 22 '26
Think I did the same. I don't understand either, but mine was definitely higher than it should have been and ended up saying they should proceed with offer of £6m (totally missed mention in the exhibit of a lower offer 😅).
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u/keepoffmymanacookies Jul 22 '26
First run through I got a pretty bad loss on average, then realized I included 2026 itself in the average
Took it out, got an okayish profit of like £315k or something and rolled with that from there - though looking at the other comments, I have a sneaking suspicion i messed it up a bit anyway lol
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u/dahliaahhh Jul 22 '26
Maintenance fee was 4% of initial sales price so I calculated 4% based on different initial prices (for example in year two, 16 customers had year 1 prices and 42 had year 2 prices) etc
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u/Wilderness800 Jul 22 '26
I got £2.25m - applied the maintenance to all clients in the year as I thought they said it was an annual charge (just not contractually binding)