Strategy for Venture Capitals
Findings:
Walnut Venture Associates:
• The fact that Walnut is willing to offer $2.5 million, $.5 million more than what RBS is seeking suggests that Walnut is taking advantage of the situation by under valuing the company.
• The current and future cash flow suggests robust financial standing of RBS. Although Walnut may not have a home run with the deal, it will be more than adequately compensated on its investment in near future.
• Too much is riding on one man at RBS. There is no guarantee how would RBS perform without Bob O’Connor.
RBS:
• Current financial position suggests that RBS is already doing good with net positive cash flow.
• They are seeking additional funding to expand their sale force so as to compound their revenue in near future.
• O’Connor is right in thinking that Walnut is valuing his company lower.
• Stringent control on the conversion of preferred stocks to common stock, heavily favoring new owners in case deal goes through.
Show here the PV of the future cash flows:
Recommendations:
Walnut Venture Associates:
• To pull the deal Walnut needs to up tick its offer, may be in the range of $6.5 to $ 7 million.
RBS:
• RBS should not haste to seal the deal. It should look for other options.
• It should put his proposal to augment the valuation to $6.5-$7 million range.
Two VC firms joining. But by making MAVF majority share, the issue is that it is going against WVA’s business
Walnut Venture Associates:
• The fact that Walnut is willing to offer $2.5 million, $.5 million more than what RBS is seeking suggests that Walnut is taking advantage of the situation by under valuing the company.
• The current and future cash flow suggests robust financial standing of RBS. Although Walnut may not have a home run with the deal, it will be more than adequately compensated on its investment in near future.
• Too much is riding on one man at RBS. There is no guarantee how would RBS perform without Bob O’Connor.
RBS:
• Current financial position suggests that RBS is already doing good with net positive cash flow.
• They are seeking additional funding to expand their sale force so as to compound their revenue in near future.
• O’Connor is right in thinking that Walnut is valuing his company lower.
• Stringent control on the conversion of preferred stocks to common stock, heavily favoring new owners in case deal goes through.
Show here the PV of the future cash flows:
Recommendations:
Walnut Venture Associates:
• To pull the deal Walnut needs to up tick its offer, may be in the range of $6.5 to $ 7 million.
RBS:
• RBS should not haste to seal the deal. It should look for other options.
• It should put his proposal to augment the valuation to $6.5-$7 million range.
Two VC firms joining. But by making MAVF majority share, the issue is that it is going against WVA’s business