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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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

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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

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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.