Venture Capital

Solution

• Conducted detailed fundamental research on company financials to get insights on revenue growth, cash flows, and other key performance indicators.
• Identified that the company had not only outpaced the industry growth by 10% in the past 5 years but also had an above-average operating margin of 24%
• Found that the company’s next-gen EUV product could extend the coverage of its customer roadmaps by 10-15 years which would help it to increase its market share.
• Identified that the company had been gaining market share for the past three years.
• Analysed that the company has key risks from its limited number of customers. Any business failure or insolvency of one of their main customers could result in significant credit losses for the company.
• Researched the impact of current regulations on exports and found that the US government could require a license for many high-tech products shipped to China from other countries if US-made components constitute more than 25% of the value.
• Based on research and management commentary, JMI found that the company did not meet the 25% threshold, but the US department might consider lowering the 25% threshold in some cases which could be a key risk in its future growth.
• Correlated the company’s enterprise value and EBITDA with competitors to understand its valuation with operating metrics.

Solution

• Began the search by classifying 10,000+ companies.
• Acquired the data list from multiple sources such as Bloomberg, industry associations, and trade journals.
• Filtered and cleaned the list down to 500 companies based on size and profitability.
• As per the client’s request, focused on 5 industry segments to understand the dynamics.
• Profiled 66 companies with a special focus on management and their affiliations, company financials, operations, and valuation ratios.

Solution

• Prepared a detailed budget model to highlight the key revenue & cost drivers of business.
• Assisted in the identification of key earnings sensitivity parameters and KPIs.
• Created returns analysis for different types of scenarios.
• Constructed a flexible model with detailed drivers and switches, enabling evaluation of potential projects and investments.
• Conducted review of relevant indicators to ensure that the deal outlay value was quantified, and that capital spending met internal funding criteria.

Solution

• Performed a screening for public and private entities in the renewable energy space and compiled a list based on their offerings.
• Filtered and reviewed renewable energy companies with a detailed analysis and history of all the investments and acquisitions in the sector.
• Computed their current and forward trading multiples and arrived at a range of exit multiples.
• Provided the range of valuation multiples based on the analysis and helped identify KPI enabling premium valuation.

Solution

JMI was engaged in the end-to-end process of deal sourcing including:

• A custom web scraping tool was built to extract data from multiple unstructured data sources based on specific criteria such as employee count, funding raised, investors, company description, company geographic location, and company sector.
• The tool filtered the results based on specific criteria such as company brand value, customer sentiment, product portfolio, social media posts, customer review, management team, and other unstructured data.
• By looking at relevant data patterns and trends, the model conducted early detection of the companies with high growth opportunities and decided whether it’s an opportunity worth pursuing or not.
• This was further refined through manual shortlisting by analysts based on investment criteria.
• Clustering analysis was also undertaken from the data points collected to further understand the geographic spread of companies shortlisted based on investment criteria. The analysis gave insights that many SaaS start-ups were getting set up in the states of Arizona, Texas, and Michigan.
• The shortlisted companies were added to the client's CRM portal and custom outreach e-mails were sent to them.
• A deck of short notes for preparation before the client's call with the prospect company management was also shared with the client.
• Promising companies for the future were also flagged, labelled, and added to the CRM portal with an alarm to check upon its status in 6 months down the line.

Solution

JMI was engaged in the end-to-end process of deal sourcing including:

• Provided a high-level overview of sector trends, outlook, and its key drivers like smartphone penetration and addressable market.
• Conducted detailed fundamental research on the company financial report to get insights on NIM, asset size, loan disbursal and other KPIs. Also, identified the catalyst and key risk factors with their mitigant for business.
• JMI team identified that the company AUM will grow at c.12% CAGR in the next 3 years with its customer acquisition cost decreasing from USD 10 to USD 8 and CLTV increasing up to 20%.
• Provided insights on the competitive landscape and constructed a benchmarking model across key metrics like market share, customer base, CAC etc.
• Developed a 5-year quarterly model with financial statements and valued the company with a market-based approach including company comparable (P/B multiple) and precedent transaction.

Solution

JMI was engaged in the end-to-end process of deal sourcing including:

• JMI team extensively reviewed the EdTech Company from an operational, financial, and market perspective.
• Identified comparable companies with similar K-12 STEM transactions and derived the EV/Revenue multiple of comparable companies.
• Figured out the pre-money and post-money valuation at EV/Revenue multiple of 2.1x and 3.3x respectively.
• Developed pre-deal presentations including acquisition thesis and investment highlights.
• JMI also supported investor/buyer search and was involved in virtual data room management.