What is the name of the valuation approach that involves the following steps: estimate the post-money valuation, determine the pre-money valuation, and determine the ownership fraction?
A)deal structure approach
B)deal alignment method
C)venture capital method
D)private equity method
E)hedge fund approach

Question

Quizplus · Accepted Answer

The given valuation approach is the Venture Capital Method, which involves estimating the post-money valuation of the company, determining the pre-money valuation (value of the company before investment), and then calculating the ownership fraction by dividing the investment amount by the pre-money valuation. This approach is commonly used by venture capitalists to value early-stage companies. The other options listed are not relevant to this specific valuation method.

What Is the Name of the Valuation Approach That Involves