Valuing Project Achieve

Topics: Net present value, Venture capital, Mathematical finance Pages: 5 (1733 words) Published: May 9, 2010
After years as a teacher and principal frustrated by the inability to effectively track school and student progress, Stacey Boyd and HBS classmate Mandy Lee founded Project Achieve, an information management system for schools. In a quickly changing industry with fast-moving competitors, Project Achieve aimed to use leading-edge technology to reduce the workload of teachers and administrators while simultaneously keeping parents and students aware of performance. In an attempt to raise capital from an array of investors, Boyd needed to assess the firm’s value before moving forward. _Project Achieve’s Competitive Advantage_

Project Achieve hopes to differentiate itself from its competitors via its emphasis on a completely web-based product and its founder’s knowledge of schools and teachers, its two main competitive advantages. As the first mover amongst entirely web-based products, Project Achieve hopes to gain significant market share before imitations of its products appear. Being entirely web-based, the system was created in a standardized manner to allow numerous schools to have the capability to use the system and get support simultaneously. In short, the firm’s products are especially scalable. The company will also collect tremendous amounts of information on students, creating yet another potential revenue stream from advertisers and content providers. Potentially, Project Achieve could evolve into the nerve center for schools. With high switching costs, such a position could be attractive to content providers and other potential acquirers. Compared to NCS’s SASI and ABACUS, Project Achieve has a more integrated web-based design and most importantly, is cheaper. Additionally, Project Achieve features an easier template and user-friendly interface compared to similar systems like IMSeries. With the potential to be used by administrators, teachers, parents, and students, Project Achieve could possibly become the platform for distance learning and communication among the aforementioned parties. This partly rests upon Boyd’s ability to gauge the technology needs in academia. Luckily, Boyd’s knowledge of the space is one of the firm’s competitive advantages. Unfortunately, the company’s technological advantages will probably be short-lived after the product hits the market, since competitors are likely to imitate Project Achieve and also move to entirely web-based products. Additionally, the firm’s marketing strategy depends heavily on the support of governors, but it is questionable whether the firm has the necessary lobbying resources to gain their support. We also question the firm’s ability to entice schools to buy its fee-based program without a sales force. Comparable Company Analysis

Based on Exhibit 3 from the case, Project Achieve has nine public companies that can be indentified as comparable. Project Achieve’s closest comparable companies are,, and Vcampus. These companies are most similar to Project Achieve in that they are all primarily online learning and training courseware. In addition, these three companies are relatively new in the marketplace with the oldest company,, going public mid-year 1994. Finally, these three companies have little to no debt, similar to Project Achieve’s reliance on internal funding. Boyd can use her research on comparable companies in her valuation of Project Achieve to calculate Project Achieve’s beta. The comparable companies could also be used in a multiples-based valuation analysis. Unfortunately we don’t have a complete set of data for each firm’s number of subscribers, otherwise we could have done a valuation based on value per subscriber. _Project Achieve’s Discount Rate_

Boyd should use a discount rate of 19.0% in her valuation of Project Achieve. This rate was determined using Achieve’s three most comparable companies,,, and Vcampus. These comparables’ equity betas...
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