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3.14 HEC > EF > Flashcards

EF Flashcards

1
Q

Maturation Phase

A

develop and idea concept to functional demonstration model (idea grows up)

takes 3 months to 2 years

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2
Q

Incubation Phase

A

build on demonstration model to prove that their idea can be financially viable. Requires drafting of a business plan. Culminates in the formation of a company.

(before the seed hatches you have to incubate and keep it warm)

9-18 months

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3
Q

Seed Phase

A

commercial launch

12-36 months

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4
Q

Consolidation Phase

A

achieve first sales and break even point

24-48 months

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5
Q

Development Phase

A

profits are achieved

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6
Q

Tag Along Rights

A

AKA co-sale rights
clauses that protect minority shareholders if majority shareholders or other shareholders sell to a 3rd party
the minority shareholders can join the transaction

minority can tag along

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7
Q

Drag Along Rights

A

prevents minority shareholders from refusing to sell their shares to get a higher price or any other reason

drags them along

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8
Q

IPO

A

going public
being listed on a stock market
new equity for company from capital increase
liquidity for shareholders

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9
Q

Trade Sale

A

selling equity to a 3rd party

industrial or financial buyer

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10
Q

Internal Growth

A

use available cash to grow current products and with innovations developed by company’s team

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11
Q

External Growth

A

acquire competitors or complementary business

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12
Q

New Equity + Debt

A

new equity from a private equity fund or a corporate fund

bank loan is easier since company is profitable

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13
Q

Break Even Point BP

A

FC/CM%

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14
Q

Cash Flow =

A

Net Profit + Depreciation

depreciation is a non cash expense

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15
Q

Balance Sheet

A

Assets and Liabilities
at a specific point in time

net assets
inventory 
WIP
customer receivables
cash and market securities
share capital
net profit loss
earning after dividends
loans and financial debt
supplier payables
social and tax debts
other payables and accruals account payables
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16
Q

Profit =

A

revenue - VC - FC

17
Q

CM =

A

sales - VC

CM% = CM / Sales

18
Q

CLV

A

average total profit from each customer/ lifetime as customer of company

19
Q

CAC

A

sales and marketing expense / orders

20
Q

Financial return =

A

net profit / total equity

21
Q

new shares =

A

n / n+ existing shares

22
Q

pre money valuation =

A

(exit value / money multiple) - new equity

23
Q

post money valuation =

A

share price * total shares

24
Q

share price =

A

pre money valuation / # of existing shares

25
Q

Cash flow definition

A

explains how much cash comes in an out during a year. (TUB)

3 types of cash flow
operation
investing
financial cash flows

26
Q

Sensitivity Analysis

A

helps you measure the impact of changes in some key parameters on your break even point

27
Q

PNL

A

provides information on your company’s ability to generate profit (leaky bathtub)

sales and direct costs
staff and payroll expenses
capex and amortization
external expenses
gross margin
added value
EBITDA
operating income
pre-tax earnings
net profit
cash flow (cash flow makes the link between PNL and financing plan) 
other income that doesn't come from company's main business
28
Q

discount rate

A

used to estimate present value of future cash flows

compensation for time value of money and risk

varies based on company’s development stage and risk aversion

pv = fv / (1+r)^n

29
Q

Main financial requirements

A 
CAPEX
WCR changes
Cash Flow (negative)
Repayments of debt
Payment of Dividends
30
Q

User break even ratio

A

CLV/CAC >1

if CAC is > cm then they will go bankrupt

31
Q

Internal Growth

A

use available cash to grow current products and innovations developed by company’s team

32
Q

External Growth

A

acquire competitors or complementary businesses

33
Q

IPO going public

A

be listed on a stock market, new equity for company from capital increase, liquidity for shareholders

34
Q

New Equity and Debt

A

new equity from a PE fund or corporate fund

35
Q

Trade Sale

A

selling equity to a third party, industrial or financial buyer

36
Q

Ratchet Clauses

A

allows for an investor to adjust her % of ownership after an additional round of financing with a lower share price (down round)

investors try to protect their interests in case of a down round

compensate in case of a down round

37
Q

Net Profit =

A

revenue - expenses

3.14 HEC (2 decks)

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