Enterprise valuations with Carta

Enterprise valuations with Carta

Author: Candice Bassell
Read time:  3 minutes
Published date:  22 April 2020
With over 15,000 valuations completed, late-stage companies on Carta can be confident that our dedicated, in-house team of analysts will provide exceptional service and audit support when delivering a 409A valuation.

Private companies have increased regulatory and compliance needs as they grow. That’s why we’ve built a team with unique industry expertise and modern tools and resources to provide our clients with an unrivaled experience.

With over 15,000 valuations completed, late-stage companies on Carta can be confident that our dedicated, in-house team of analysts will provide exceptional service and audit support when delivering a 409A valuation

Enterprise Valuations with Carta | Carta

Here’s what you can expect with a Carta 409A valuation:

Data accuracy

Accurate enterprise valuations are not possible without accurate data. If your cap table isn’t right, the resulting valuation isn’t right. Carta is the leading provider of 409A valuations largely because our clients are able to easily maintain their cap tables on our platform. And we stress test those cap tables for accuracy and as a result, our analysts can leverage your data to determine a company’s valuation quickly and accurately.

Best in class methods

Our 50+ analysts are some of the best and brightest in the industry. 

Valuation Policy

Our technical experts continually evaluate our valuation policy and the methods we use to ensure Carta is on the cutting edge. Too often in practice, the same company will be valued differently by two different appraisers, by the funds invested in the company, even by different analysts within the same firm! The reason for that is that valuation is based on loose guidance. At Carta, we’ve implemented a comprehensive valuation policy to guarantee consistency among our valuations.

Our valuation policy was created by industry experts and addresses:

  • Data validation 

  • Methodology selection 

  • Application of appropriate valuation adjustments (like discounts for lack of marketability) 

  • Review of the analysis prior to completion 

Our goal is to reduce subjectivity and variability between our analysts and to create a better customer experience that is faster, defensible, and more reliable than anything else on the market today.

New valuation models

We value hundreds of companies every month. Seeing this many valuations allows us to observe trends and understand issues that arise. We’ve even developed new valuation models to address issues that we see.

We’ve learned that a large percentage of early-stage companies that raise rounds of preferred financing ultimately fail or have an early, unsuccessful exit event. Yet valuation professionals are required to reference those rounds in preparing valuations, even though that type of analysis often doesn’t fully capture the risk associated with the company. 

To address this problem, Carta implemented a hybrid backsolve model that we now use in many early-stage valuations. The hybrid backsolve combines two option pricing models into one analysis that calibrates to a recent preferred financing round. It incorporates the high probability of failure for an early-stage startup and results in a lower, risk-adjusted value for common stock. We have been using this model for many of our clients since 2018. 

Enterprise valuations with Carta

Audit defensible and IPO ready valuations

For our later-stage clients, however, the concerns are different. These clients are starting to contemplate exits, are working with audit teams, and experience more scrutiny on their valuations. They often require more frequent valuation updates (biannual or quarterly) and may wish to consult with experts on how their valuations are affected by certain situations, such as secondary sales of their stock. 

We leverage scenario-based valuation methodologies for our clients that are nearing an exit. The team that works on the valuation will ask about the timing, probability, and expected value of various exit events. We will review banker decks and purchase agreements to understand possible exit scenarios and work closely with management in putting together our analysis. 

Our team works with auditors from all major firms. We have had over 1,500 valuations audited and like to work collaboratively with audit teams to help streamline and prepare for audits. Numerous members of our team previously worked at audit firms reviewing valuations, so we understand the process and what information auditors need. 

Enterprise valuations with Carta

Carta helps over 500 late-stage private companies with their 409A valuations. Our team provides expert service and support to our clients. It’s important to have an experienced valuation advisor, especially in times of market turbulence. Whether you’re a customer already or not, if you have questions about an upcoming valuation, please reach out to us at val-enterprise@carta.com.

DISCLOSURE: This communication is being sent on behalf of Carta Valuations, LLC (“Carta”), an affiliate of eShares, Inc. dba Carta, Inc. This communication is not to be construed as legal, financial, accounting or tax advice and is for informational purposes only. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.

Candice Bassell is Senior Director of Valuations and Financial Reporting at Carta. Candice has specialized in private company valuations since 2005. Prior to joining Carta, she was a Managing Director of valuations at Grant Thornton.