Jul

Startup Valuations and Intangibles: Take Back the Power

Startups are at the mercy of investors when it comes to seeking large amounts of capital for scaling their business. The solution? Startups must identify how their intangible assets will be monetized in a respective market through intelligent investment banking analysis and services.

Owners are in a better position to value their intangible assets and competitive advantages than any investor. This is because the real value of a startup isn’t found in the financial statements, financial terms, or traditional financial metrics that are used by investors on a regular basis. Startup assets are fundamentally intangible. These intangible assets are always unique to an industry and in many cases unique to a company.

Examples of these intangible assets are daily active users (DAUs), customer data to improve pricing, sales funnel optimization, and costs of customer acquisition.

Startups must work to identify, develop, and monetize their intangible assets by generating a narrative for predictable and repeatable processes. Additionally, they need a pro forma that allows the startup to monitor and improve corporate performance based on intangible metrics.

When these two goals are met, the power is in the owner’s hands. Now there is a clear way to define value, show how the market responds to it, and then maximize it to increase the value of the company.

Contact Jahani and Associates today. Take back the power and no longer be at the mercy of investors when seeking funds.

Read our next article: Identify, Develop, and Implement Intangible Assets to Maximize Your Value

Jul

M&A Insights: Use the Power of Intangibles to Maximize Your Value

M&A Insights: Use the Power of Intangibles to Maximize Your Company Value

M&A Insights: Two kinds of intangible assets

In the world of investment banking, there are two kinds of intangible assets. The first is known as “identifiable” intangibles. These are things like patents, trademarks, copyrights, and customer relationships. In short, these are intangibles that GAAP and FASB have determined are consistent enough to be subject to specific valuation rules. When valued these assets are referred to as “intangible assets.”

The second category of intangible assets is known as “unidentifiable” intangibles. These are essentially everything else. Examples include selection algorithms (Netflix, Amazon, and Hulu), operational synergies, talent, and other business combination advantages. When valued these assets generally fall under goodwill. Goodwill is defined as the amount over fair market value an acquirer pays for a target company.

These two kinds of intangibles play a significant role in the valuation of a company. In fact, Jahani and Associates analyzed over 500 M&A transactions among tech giants such as Apple, Alphabet, Facebook, and Microsoft to determine exactly how much value was placed in these categories. The results were astounding.

Intangible assets represented 22% of the money spent on acquisitions for these tech giants. Goodwill accounted for 77% of the money spent on acquisitions from 2010 – 2016. Together, identifiable and unidentifiable assets made up 99% of the purchase price for all acquisitions made by tech giants from 2010 – 2016.

M&A Insights: Maximizing a company’s value

These results are astounding, to say the least. They are astounding for two reasons: 1) They provide a clear and measurable path to maximizing a company’s value and the likelihood of being acquired by a tech giant and 2) they provide insight into why a tech giant will buy targets based on their business model.

M&A Insights: The way a company uses this information, and the unique value Jahani and Associates brings to our clients’ business, is based on three factors:

The industry vertical of the target
The specific business processes that are congruent with those of selected acquirers
A proprietary and data-driven investment banking process

Owners of candidate businesses must consider these factors when building their business. The considerations play a significant role well outside of the traditional investment banking timeline. Meaning the business owner must identify, develop, and implement these intangible assets more than 12 months before they plan to sell their company.

Read our next article: Identify, Develop, and Implement Intangible Assets to Maximize Your Value

Jul

The Intangible Asset You Didn’t Know You Had: Customer Data

Customer Data: The Intangible Asset You Didn’t Know You Had

Customer data is no longer just phone numbers, addresses, zip codes, and work phones. In the age of programmatic media buying, customer data is quantified and codified down to screen behavior, social behavior, geo-location, favorite foods, favorite vacation spots, and much more. The evolution of customer data is the major driver behind creating business value and yet one of the most elusive.

Jahani and Associates analyzed over 500 M&A transactions among technology giants. We determined that 100% of the marketing and advertising acquisitions were driven by customer data capabilities. Technology giants use customer data to improve media buying. The acquired customer data capabilities:

Increased number of customer data interfaces for the acquirer
- For example: Alphabet’s acquisition of Famebit
Increased processing power of the acquirer’s customer data
- For example: Alphabet’s acquisition of DeepMind. DeepMind provides deep learning solutions. Ray Kurzweil, Director of Engineering at Google, said that he wants to build a search engine so advanced that it could act like a “cybernetic friend.”

Companies seeking to maximize their value in the technology space must intimately understand their data and how it can be used to improve both collection and processing to generate insights. Jahani and Associates uses its proprietary Intangible Asset Framework to understand how our clients will increase their competitive advantage around customer data.

We have developed this framework from serving $100 million technology clients and partnering with large VC firms. Our findings consistently show how successful customer data strategies overlap with either a lucrative business model or the business model of a strategic partner. Our three-step process that identifies, develops, and monetizes intangible assets will measure your competitive advantages, such as customer data monetization. This provides consistent and repeatable results for maximizing value.

Identifying Intangibles in Ad Tech M&A Value

Jul

The Hungry for Health Games: Aligning Strategy and Competitive Advantage

Jahani and Associates analyzed over 200 M&A transactions and equity investments in digital health from 2013 to 2016. We mapped a selection of these companies onto a four-quadrant plane to understand their natural differentiators. We considered both the scope of care delivery (for example, an urgent care company versus a software analytics company) and the size of the company’s financials and number of employees.

Quadrant 1: Social Players

These companies typically have a large customer base, but are relatively lean due to the simplicity of their products. These are socially themed companies, like FitnessKeeper and b.well.

Quadrant 2: Analytic Leaders

These are software-dominated companies that built their businesses by providing automation, simplicity, and streamlining to the data-rich and complex USA healthcare ecosystem.

Quadrant 3: Agile Players

Our research indicates that these companies are in the process of competing to transition to quadrant four. They have strong customer relationships and are starting to scale.

Quadrant 4: Tomorrow’s Healthcare Providers (THP)

THPs are the dominant players of today and tomorrow. These are companies that have a proven ability to scale, are generally profitable, and have strong brands. They are challenged to increase their competitive advantage by generating new, innovative digital health products or by acquiring other innovative companies.

Jahani and Associates work with digital health companies to identify, develop, and implement their competitive advantage powered by intangible assets.

You may also be interested in our article Part 2: Developing Intangibles in Ad Tech M&A Value.

Also you can read our article Identify, Develop, and Implement Intangible Assets to Maximize Your Value.

Jul

How Do I Maximize My Company’s Sale Price? (I’m a Business Owner)

Jahani and Associates have been asked “How do I maximize my company’s sale price?” time and time again. The answer is always simple but the execution is never easy. Owners looking to sell their company must understand the fundamental dynamics of identifying, developing, and monetizing corporate value.

An acquisition price includes five parameters: tangible assets, intangible assets, cash, liabilities, and goodwill. Companies maximize their value by creating clarity around cash and tangible assets, having clean and transparent financial statements, and pitching themselves in a way that demonstrates sustainable value.

But that is not the key to maximizing your company’s sale price. The facts show that the vast majority of investment decisions are made based on intangible assets and goodwill. Through extensive research and market experience, Jahani and Associates have identified goodwill drivers specific to a company’s industry and competitive advantage. Whether you are selling to a mid-market private equity company or selling to Apple, you will maximize your company’s value by increasing transparency around intangibles and goodwill drivers.

Jahani and Associates will identify, develop, and monetize your high-value intangible assets and goodwill drivers to maximize your company’s sale price.

Intangible investments have been dominating the industry since 1995 and the subsequent dot-com boom. Intangible assets are consistently undervalued, particularly for small companies at the mercy of large players. This is where we come in.

We utilize our intangible asset framework to systematically and rigorously maximize a company’s sale price.

The process starts well in advance of the transaction execution date to definitively build and identify value. Business owners will maximize their company’s value by partnering with Jahani and Associates, an investment banking firm that understands the true value of a company and how to maximize it.

Read our article: Identify, Develop, and Implement Intangible Assets to Maximize Your Value

Jul

Digital Health: Competition for VC Dollars

Digital health is an exciting area, ripe with growing Medicare reimbursements, new technologies, and real potential to improve the frustrating healthcare consumer experience in the USA.

Jahani and Associates analyzed over 200 M&A transactions and equity investments in digital health from 2013 to 2016. Our results showed a 20% decrease in investment funds per company in 2016 versus 2015. Despite a 604% growth in Medicare reimbursements from 2006 to 2016 and a 62% increase in telehealth consultation over the same period, digital health companies must carefully develop their competitive advantages to both increase access to capital and decrease their cost of capital.

By analyzing companies that maintain competitive advantages such as Welltok, SnapMD, Pager, and Teledoc we elicited two opportunities for creating value:

There are opportunities for digital health returns, but companies must respond to a saturating market by focusing on improving the customer experience while at the same time optimizing the business model of existing healthcare giants.

Jahani and Associates recommends digital health companies focus on four major intangible assets to accomplish the value goals listed above:

Optimize member access via subscription contracts, members per client, providers per network, and the visits offered to members based on contracts.
Create a revenue model driven by customer engagement. Digital health companies are much closer to their consumers than traditional healthcare companies.
Create a scalable and flexible business model that responds to seasonality, subscription fees, and access fee changes.
Consistently provide regulatory compliant solutions in response to existing and expected reforms such as HIPAA one and two, HITECH, ACA, and BPCI.

This is all predicated on the ability to identify, develop, and monetize intangible assets using the Jahani and Associates’ intangible asset framework.

Read our article: Identify, Develop, and Implement Intangible Assets to Maximize Your Value

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Startup Valuations and Intangibles: Take Back the Power

Startups are at the mercy of investors when it comes to seeking large amounts of capital for scaling their business. The solution? Startups must identify how their intangible assets will be monetized in a respective market through intelligent investment banking analysis and services.

M&A Insights: Use the Power of Intangibles to Maximize Your Company Value

M&A Insights: Two kinds of intangible assets

M&A Insights: Maximizing a company’s value

Customer Data: The Intangible Asset You Didn’t Know You Had

The Hungry for Health Games: Aligning Strategy and Competitive Advantage

Quadrant 1: Social Players

Quadrant 2: Analytic Leaders

Quadrant 3: Agile Players

Quadrant 4: Tomorrow’s Healthcare Providers (THP)

How Do I Maximize My Company’s Sale Price? (I’m a Business Owner)

Digital Health: Competition for VC Dollars

Digital health is an exciting area, ripe with growing Medicare reimbursements, new technologies, and real potential to improve the frustrating healthcare consumer experience in the USA.

Jahani and Associates (J&A) is a global professional services firm headquartered in New York City. J&A has deep connections in the Middle East, Southeast Asia, Latin America, and North America.

The firm provides growth services including investment banking advisory, financial services, and revenue growth services to clients all over the world.

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