Docstoc

class2

Document Sample
class2 Powered By Docstoc
					      Business 16
Stanford Department of
 Continuing Education
   Class # 2, 9/28/09
      Financial Statements

David Pezeshki
Dave@alloyventures.com
http://www.alloyventures.com/class
.html
      Administration
o Questions from last week?
                Overview
oWhat is in the financial statements
o Who uses the data

o Common mistakes

o Sources for examples
o Preparing financial statements

o Company valuation

o Real world extreme example
    What is in the financial
        statements?

o Your 5-year business plan in numbers

o An Outcome

   o Sales

   o Subscribers

   o Milestone (pharmaceutical)
   What is in the financial
       statements?
o Support for the outcome
  o   Balance Sheet
  o   Profit & Loss Statement
  o   Cash Flow (use of funds)
  o   Head Count
  o   Milestones
       Who uses the data?

o Management
   o Operational Blue Print

   o “What if” analysis

o Banks
   o Credit Lines (Growth Capital, Equipment)

o Investors
   o Determining Valuation for Investment

   o Acquired Companies
         Common Mistakes

o Math Errors
   o column sum, carry forward, x-ref of amounts

o Unrealistic Assumptions
   o Revenue of $10B by Year 5

   o Lack of parallels with existing companies

o Excessive Backup
   o 120 pages of supporting schedules
     Sources for examples

o Similar companies
   o Annual reports
   o EDGAR Online
      o (http://www.sec.gov/edgar/searchedgar/webusers.htm)
   o Investment bankers
o Professional advisors
   o Attorney
   o CPA
o Commercial bank
Preparing Financial Statements

 o Web 2.0.com, Inc.
 o Three founders
 o Develop online search engine
 o Office space is $6 sq ft
 o Can sell advertising for $5 (Per Thousand
   Impression)
 o Expect to sell 3B impressions in 2013
      Company Valuation

o Price to sell the company in 2013
o Price to sell equity in 2009 and 2010
Real world extreme example


o YouTube, Inc.
   o Sold ~25% stake in 2005, 2006 for a total of 11.5M,
     that became worth ~400M
   o Google acquired company in 2006 at a valuation
     $1.5B
         Finance Strategies

o Sell Debt
  o Maintain ownership
  o Who is liable (personal guarantee)
  o Small Business Administration (SBIC)


o Sell Equity
  o What do you get in exchange (other than capital)
            Asset Protection

o Business Insurance
  o Property, workers compensation
  o key man
o Real Estate
  o property lease options
     o   sub-leasing to others, expanding etc.
o Computer file back-up
  o offsite
  o disaster recovery
         THE END


Remember class is on next week!

				
DOCUMENT INFO