Explain this valuation. To get full credit for your answer, show your work using math. ftadviser.com/companies/2021…
"Founded a decade ago, Nutmeg currently counts more than 140,000 clients and over £3.5bn of AUM. In its most recent set of full accounts for 2019, the firm posted a pretax loss of £22 million." finextra.com/newsarticle/38…
"In 2019, Nutmeg raised around £4 million in a securities offering on Crowdcube... 1.49% equity stake at a pre-money valuation of £251 million. Over 2000 investors participated in the securities crowdfunding offering of Nutmeg." crowdfundinsider.com/2021/06/176779…
As a buyer with access to the financials of Nutmeg I would value the business using a bottoms up CBCV analysis. CBCV is particularly useful in this case given higher customer acquisition cost (CAC) in financial services. This deal's cost per customer is...morganstanley.com/im/publication…
CBCV is the process of valuing a firm by forecasting current and future customer behavior using customer data in conjunction with traditional financial data. If you can project the future value of all of the customers and add all that up, that's the value of the business.
A valuation of a business bottoms up via CBCV has two parts: 1) a present value of continuation of the operations it has already established (ie, steady-state value); and 2) the present value of growth opportunities (PVGO). No pretend assumptions are required. Relatively simple. 
"The company’s revenue grew 29% in 2019 to £9.3 million from the previous year, and its loss increased 15% to £21.2 million. Its shareholders, who will be bought out in the deal, include ** Goldman Sachs** and Schroders." google.com/amp/s/www.wsj.…
If they pay $1B for 140k existing customers and 2/3 of the value is "present value of growth opportunities" (PVGO), that means $333,333 was paid for those existing customers.
US$ 1 billion / 140,000) / 3 =
$2,380.95 was paid for each existing customer.
US$ 1 billion / 140,000) / 3 =
$2,380.95 was paid for each existing customer.
To be clear, this is what was paid for each Nutmeg customer. This isn't my valuation.
Price is what you pay. Value is what you get.
I can't do a CBCV valuation in this case since I don't have all of the necessary data. I can eyeball CBCV tho based on comparable businesses.
Price is what you pay. Value is what you get.
I can't do a CBCV valuation in this case since I don't have all of the necessary data. I can eyeball CBCV tho based on comparable businesses.
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