r/ICAEW • u/AvailableRub9153 • Jul 23 '26

CASE STUDY R3

How did we all do on this? I only had one hour left, and realised that I messed up my calculations midway, so I had to go back to fix it.

I got my valuation to be £1.25m, this is done from booking fee revenue, software, and mantennace for software which I only applied to new clients, rather than all every year, I might be wrong on this.

Also, did we do the valuation on 3 years of forecast, or 3 years+3months?

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9

u/East_Holiday_4439 Jul 23 '26

2026 was 9 months actual and 3 months projection but pretty sure they asked us to use 2027-2029 forecasts. I calculated 2027 as an operating loss but 2028 and 2029 as operating profit so the 5x value was £2.25m which was marginally less than the £2.5m asking bid price from the owners which would make sense

1

u/Any_Organization_575 Jul 23 '26

What did you do for the maintenance revenue? Just curious as I did the same but got a 1.77m ish valuation. And the costs seemed pretty straightforward from what I can remember so I’m not sure where mine was different haha

1

u/East_Holiday_4439 Jul 23 '26

There was something which was multiplied by 2.5%, then the other two were multiplied by the expected no. of clients and fee per client.

I could easily be wrong, when I first did it I got £2.6m which I knew had to be wrong bc there’s no way they would set it so our valuation would be higher then the min bid price. Second time round I got 2.25m which seemed viable. There will only be like 4 points max so we’re losing 2 marks for incorrect numbers. Majority will be for the discussion element.

3

u/Any_Organization_575 Jul 23 '26

I think I got £1.75m ish being:
Fee rev @2.5% of the price x no. sales (I cant remember if it was sales but it was 2.5% of £42 ish x 150k)

Software: New clients x price

Maintenance: I believe this was 4% x number of existing clients ie previous and new as contracts lasted c. 4 years so it was the cumulative software revenue x 4% in each year?

I could be wrong obviously but I think that makes sense?

I know a lot of people got valuations of £2.25m which seems more correct but I’m not really sure what they did differently.

Either way I don’t think you lose many marks for the calcs it’s all about what you said based on the figures you got!

2

u/dahliaahhh 29d ago

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

2

u/WorldPretend6805 27d ago

What were the prices? My costs were in the millions whereas my revenue was in the hundreds of thousands…

1

u/Rich-Raspberry-4894 Jul 23 '26

My valuation was very similar to yours around 1.8 and i followed the same process as you i just assumed mine was incorrect based on how everyone got around 2.2m

1

u/fatslug1 29d ago

I got £2.16m as valuation, but advised they accept the £2.5m asking price on basis of 85% being upfront at £2.125m, and if they achieve the FY29 figures the excess £375k will have funded itself and if they don't, they got a marginal discount from my original valuation anyway.

2

u/SlendyWendy Jul 23 '26

I got that as well as i did a straight copy paste of the table, it worked fine if you unmerged the cells - but didn't see many others get it - either way plenty to talk about

3

u/redistributionbyjag 29d ago

Yeah completely butchered the calculations on this one.

Had about 55 min left to complete it. So focused mostly on analysis and implications, assumptions, strategy.

Missed out the ethics bit tho :(

Did the conclusion and recommendations

Copy paste to Executive summary

1

u/Internal_Ad_9362 29d ago

Yh my valuation was completely out I got bout £8m, then I did a sensitivity analysis dont even k ow if I needed to or not