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Are you up to date on the guidance to fair value measurement under ASC 820 as applicable to early stage enterprise? Make sure you are aware of the guidance in the AICPA Guide on the Valuation of Portfolio Investments of Venture Capital and Private Equity Funds and Other Investment Companies, as well as other best practices. In our upcoming webinar, Antonella Puca and Andreas Dal Santo provide an overview of the valuation methodologies that are suitable for early stage enterprises and discuss the key provisions of the Guide as they apply to early stage enterprise valuation. See practical examples of how to set up a calibration model at the transaction date and how to apply the calibration model to subsequent measurement periods. Learn the details of the asset accumulation method and see a practical example of how real option methodologies can be used to value enterprises where the valuation is driven by intangible assets. Don’t miss this packed event.
Program Agenda
Introduction:
Definition of “early stage enterprise” based on the stages of development described in the AICPA Guide
Definition of fair value under ASC 820 and how it relates to the definition of fair market value under IRC
List of key sources for the most recent guidance on valuation of early stage enterprises and provide some insight in the context surrounding the recent activity in this area (AICPA, FASB, IVSC)
Review of basic valuation models
Overview of the state of the venture capital industry in the US based on the latest data
Discuss exit multiples, IRR expectations, dry powder available for investment and set up a background for the valuation discussion that follows
Valuation of ESE – Initial Measurement
Definition of unit of account
Definition of Transaction Price and discussion of when a transaction can be considered “at arm’s length” and be used to provide a basis for valuation
Definition and treatment of transaction costs. What is included in the transaction price as measure of fair value?
Introduction to calibration
Practical example of how a calibration model is set up
Inputs in the calibration model at inception
Allocation to determine value of individual shares
Valuation of ESE – Subsequent Measurement – Calibration
Practical example of how a calibration model can be applied to subsequent measurement
Review of inputs, conditions under which inputs need to be updated, how to conduct a market analysis for comparability
Issues in comparability for ESE. DLOM and tax considerations
Valuation of ESE – Subsequent Measurement – Asset Accumulation Method
Definition of asset accumulation method
AICPA perspective
Discussion of applicability for entities with key intangible assets
Practical example of how the AAM model can be applied to an ESE
Practical example of how to value a sample intangible asset (patent) using real option modeling and how that can become the basis for the enterprise valuation
Challenges in the implementation of real option modelling
Other Considerations: Other modelling tools for ESE, pros and cons. Tax considerations. Areas of focus in current research.
Learning Objectives
Describe the provisions in the AICPA Guide on the Valuation of Portfolio Investments of Venture Capital and Private Equity Funds and Other Investment Companies as they apply to Early Stage Enterprises
Create a calibration model based and how to apply calibration in subsequent measurement periods
Apply the asset accumulation method to the valuation of an early stage enterprise where the valuation is driven by key intangible assets
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