Maimuna Bello
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Accounting, Valuation, Financial reporting, Data Analysis, Payroll, Data entry, Research.
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Table of Contents
Page
1. Company General Information
3
—----------------------------------------------------------------------------------------2. Valuation
4
—----------------------------------------------------------------------------------------3. Current funding round
5
—----------------------------------------------------------------------------------------4. Past funding rounds & Current ownership
6
—----------------------------------------------------------------------------------------5. Past Performance
7
—----------------------------------------------------------------------------------------6. Forecast Summary
8
—----------------------------------------------------------------------------------------7. Use of funds
9
—----------------------------------------------------------------------------------------8. Valuation methods
8.1 Scorecard Method
10
8.2 VC method
11
8.3 DCF with LTG
12
—-----------------------------------------------------------------------------------------9. Financial Projections
9.1 Profit or Loss
13
9.2 Financial Position
14
9.3 Cash Flow
16
9.4 Five Year Valuation
16
—-----------------------------------------------------------------------------------------10. Conclusion
17
—-----------------------------------------------------------------------------------------11. Appendix
18
Legwork Herald Ltd, Valuation Report.
2
1. CURRENT VALUATION - $12,000,000
The pre-money valuation of $12,000,000 displayed below is the result of the weighted
average of 3 different methods. The use of both qualitative and quantitative methods is a
best practice in company valuation, as looking at the business from different perspectives
results in a more comprehensive and reliable view.
3 VALUATION METHODS
Legwork Herald Ltd, Valuation Report.
4
3. PAST FUNDING ROUNDS
No funding has been raised in the past. The company has been entirely
bootstrapped till date.
4. CURRENT OWNERSHIP
Here is an overview of the current shareholders in the company. For more
information on type of shares, unassigned shares and in general, a detailed cap
table can be requested of the company in question.
Legwork Herald Ltd, Valuation Report.
6
5. PAST PERFORMANCE
Here is an overview of past performance for the 5 months ending October 2022. The
profit margins are relatively in line with 1industry averages with a good return on assets.
1
The Information on Industry averages is available at Personal Services Industry Profitability by quarter,
Gross, Operating and Net Margin from 3 Q 2022
Legwork Herald Ltd, Valuation Report.
7
6. FORECASTS SUMMARY
FUTURE PROFITABILITY
SHARE PRICE GROWTH
Legwork Herald Ltd, Valuation Report.
8
7. USE OF FUNDS - $500,000
Here is a breakdown on how the company will use the funds raised.
Legwork Herald Ltd, Valuation Report.
9
8. VALUATION METHODS
8.1 Scorecard Method: $23,096,610
The ‘Scorecard Method’, Developed by Bill Payne, is a top down approach that compares
a startup to other typical startups at the same stage or within a geographical region and
startup-sector using 7 factors.
The PAYNE Scorecard can be broken down into 3 Steps;
● Determine the Average Industry Valuation.
● Determine the Weight of the factors.
● Valuation (The sum of these weighted scores multiplied by the average valuation
leads to the company’s pre-money valuation).
Average Industry valuation:
$342,172,000
Weighting: All assumed scores
5%
Factor:
0.07
/// Please see appendix for data sources, defaults, and breakdown of the traits
Legwork Herald Ltd, Valuation Report.
10
8.2 VC Method
Pre-money Valuation: $15,842,288
The venture capital method (VC Method), as the name implies, is most commonly used in
the venture capital industry and for valuing startup ventures. Investors seek to capitalize
on their investment via an exit at some future date in the startups lifecycle.
/// Please see appendix for data sources
Legwork Herald Ltd, Valuation Report.
11
8.3 DCF with LTG Method: $7,624,894
The DCF with LTG (Long Term Growth) assumes the cash flows beyond the projected
ones will grow forever at a constant rate based on the industry and computes the
Terminal Value accordingly.
/// Please see appendix for data sources
Legwork Herald Ltd, Valuation Report.
12
9. Financial Projections:
9.1Profit or Loss
The profit or loss projections are displayed below. Data about revenues and operating
costs are provided by the company.
Depreciation and amortization, interest, and taxes are either provided by the company or
estimated.
ITEM
Year 1
Year 2
Year 3
Year 4
Year 5
Revenue
Enrollment Revenue
$1,000,000.00
$1,090,666.67
$1,189,553.78
$1,297,406.65
$1,415,038.19
Product Revenue
$4,000,000.00
$4,362,666.67
$4,758,215.11
$5,189,626.61
$5,660,152.76
Service Revenue
$2,000,000.00
$2,181,333.33
$2,379,107.56
$2,594,813.31
$2,830,076.38
Other revenue
$3,000,000.00
$3,272,000.00
$3,568,661.33
$3,892,219.96
$4,245,114.57
Total revenue
$10,000,000.00
$10,906,666.67
$11,895,537.78
$12,974,066.54 $14,150,381.90
Direct Costs
Services and Logistics
Salaries and wages
Total Direct costs
Gross Profit
$2,569,164.08
$2,627,594.96
$2,675,501.63
$2,710,495.38
$2,729,840.85
$642,291.02
$656,898.74
$668,875.41
$677,623.85
$682,460.21
$3,211,455.10
$3,284,493.70
$3,344,377.04
$3,388,119.23
$3,412,301.07
$6,788,544.90
$7,622,172.97
$8,551,160.74
$9,585,947.31 $10,738,080.84
$2,230,012.36
$2,432,200.14
$2,545,659.78
$2,542,933.07
$2,773,492.34
$148,667.49
$162,146.68
$169,710.65
$169,528.87
$184,899.49
$1,040,672.43
$1,135,026.73
$1,187,974.56
$1,186,702.10
$1,294,296.42
Professional Fees
$247,779.15
$270,244.46
$282,851.09
$282,548.12
$308,165.82
Covering and Statutory Fees
$148,667.49
$162,146.68
$169,710.65
$169,528.87
$184,899.49
General Operating Costs
$495,558.30
$540,488.92
$565,702.17
$565,096.24
$616,331.63
Research and Development
$396,446.64
$432,391.14
$452,561.74
$452,076.99
$493,065.30
Depreciation
$247,779.15
$270,244.46
$282,851.09
$282,548.12
$308,165.82
EXPENDITURE
Operating expenditure
Staff and Other Personnel Costs
Contractual Costs
Public Relations
Total operating expenditure
$4,955,583.01
$5,404,889.21
$5,657,021.74
$5,650,962.38
$6,163,316.30
PROFIT BEFORE TAX
$1,832,961.88
$2,217,283.76
$2,894,139.00
$3,934,984.93
$4,574,764.53
Legwork Herald Ltd, Valuation Report.
13
TAXES
Current Tax
$366,592.38
$443,456.75
$578,827.80
$786,996.99
$914,952.91
TOTAL TAXES
$366,592.38
$443,456.75
$578,827.80
$786,996.99
$914,952.91
PROFIT AFTER TAX
$1,466,369.51
$1,773,827.01
$2,315,311.20
$3,147,987.94
$3,659,811.63
9.2 Financial Position
The Financial position projections are displayed below. Assets, Liabilities and Capital are
either provided by the company or estimated based on the average percentage for
companies in the Industry.
ASSETS
$
$
$
$
$
$
Year 1
Year 2
Year 3
Year 4
Year 5
Current Assets
brought
forward
Cash and short-term investments
3,829.58 2,471,370.75 4,457,001.73 7,091,076.69
Accounts receivable
2,121.22
10,679,175.1
2
14,576,655.10
929,328.50
1,013,587.62
Total current assets
5,950.80 3,187,667.76 5,238,243.00 7,943,-,608,503.62
15,590,242.72
Non-Current Assets
brought
forward
Property Plant and Equipment
7,187.27
716,297.01
Year 1
781,241.27
Year 2
852,073.81
Year 3
Year 4
996,083.03 1,108,409.57 1,126,442.71 1,124,927.87
Year 5
1,183,016.35
Patent
-
40,000.00
40,000.00
50,000.00
50,000.00
50,000.00
Software
-
210,000.00
210,000.00
245,000.00
245,000.00
315,000.00
395.58
149,063.07
311,209.74
480,920.39
650,449.27
835,348.75
6,791.70 1,097,019.96 1,047,199.83
940,522.31
769,478.60
712,667.59
12,742.49 4,284,687.72 6,285,442.83 8,883,672.81
12,377,982.2
3
16,302,910.31
Less Accumulated depreciation
expense
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
brought
forward
Accounts payable
5,340.91 1,845,212.59 1,887,178.53 1,921,585.83 1,946,718.87
Current Tax
-
Year 1
443,456.75
Year 3
Year 4
578,827.80
Year 5
1,960,613.08
786,996.99
914,952.91
Total Current Liabilities
5,340.91 2,211,804.97 2,330,635.28 2,500,413.63 2,733,715.86
2,875,565.99
TOTAL LIABILITIES
5,340.91 2,211,804.97 2,330,635.28 2,500,413.63 2,733,715.86
2,875,565.99
Legwork Herald Ltd, Valuation Report.
366,592.38
Year 2
14
EQUITY
Equity
brought
forward
Share Capital
2,272.73
2,272.73
2,272.73
2,272.73
2,272.73
2,272.73
-
500,000.00
500,000.00
500,000.00
500,000.00
500,000.00
Retained earnings
5,128.86 1,471,498.36 3,245,325.37 5,560,636.57 8,708,624.52
12,368,436.14
TOTAL EQUITY
7,401.58 1,973,771.09 3,747,598.10 6,062,909.30 9,210,897.24
12,870,708.87
12,742.49 4,185,576.06 6,078,233.38 8,563,-,944,613.10
15,746,274.86
Seed Fund
TOTAL LIABILITIES AND
EQUITY
Year 1
Year 2
Year 3
Year 4
Year 5
9.3 Cash Flow
The cash flow projections are displayed below. Capital expenditure, Account payables,
Account receivables, Depreciation and Amortization are either provided by the company
or estimated based on the average percentage for companies in the Industry.
Operating activities
Net income
Year 1
Year 2
Year 3
Year 4
1,466,369.51 1,773,827.01 2,315,311.20
Year 5
3,147,987.94
Total
3,659,-,363,307.29
Depreciation
247,779.15
270,244.46
282,851.09
282,548.12
308,165.82
1,391,588.63
Current Tax
366,592.38
443,456.75
578,827.80
786,996.99
914,952.91
3,090,826.82
- 366,592.38 - 443,456.75
- 578,827.80
- 786,996.99 - 2,175,873.91
- 84,259.12 - 1,011,466.40
Tax paid
Accounts receivable
- 714,175.79
- 64,944.26
- 70,832.54
- 77,254.69
Accounts payable
1,839,871.68
41,965.94
34,407.30
25,133.04
Cash from operating activities
3,206,436.92 2,097,957.52 2,697,108.09
3,586,583.60
Investing activities
Asset Acquisition
Proceeds from Sale of assets
Cash from investing activities
Year 1
Year 2
Year 3
- 1,238,895.75 - 112,326.55
Year 4
-
-
-
1,514.84
- 1,238,895.75 - 112,326.55
- 63,033.13
1,514.84
Legwork Herald Ltd, Valuation Report.
15
1,955,272.17
4,025,-,613,654.59
Year 5
- 63,033.13
-
13,894.21
Total
- 128,088.48 - 1,542,343.92
-
1,514.84
- 128,088.48 - 1,540,829.08
Financing activities
New share Issue (Redemption of
shares)
New fund raise (Redemption of
funds)
Year 1
Cumulative cash flow
Beginning cash balance
Ending cash balance
Year 3
Year 4
Year 5
Total
-
-
-
-
-
-
500,000.00
-
-
-
-
500,000.00
-
-
-
-
-
-
500,000.00
-
-
-
-
500,000.00
2,467,541.17 1,985,630.98 2,634,074.96
3,588,098.44
3,829.58 2,471,370.75 4,457,001.73
7,091,076.69
Issuance (repayment) of debt
Cash from financing activities
Year 2
2,471,370.75 4,457,001.73 7,091,-,679,175.12
3,897,-,572,825.52
10,679,175.12
3,829.58
14,576,-,576,655.10
9.4 Five Year Valuation
5 YEAR VALUATION
Year 1
EBITDA
Valuation
No. of shares in Issue
Share Price
Ebitda Growth rate
No. of shares in Issue
Average Share price Growth
Method of Valuation
Multiple
Year 2
Year 3
Year 4
Year 5
$2,080,741.03 $2,487,528.22 $3,176,990.09 $4,217,533.05 $4,882,930.35
$37,453,338.62 $44,775,507.99 $57,185,821.57 $75,915,594.86 $87,892,746.28
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
$37.45
$44.78
$57.19
$75.92
$87.89
23.77%
1,000,-%
EBITDA multiple
18x
Legwork Herald Ltd, Valuation Report.
16
11. Appendix
11.1 Weights of the methods
The default weight of each method is determined by the Valuer based on best fit for
startups and they are shown below.
Methods
Weights
Basis for chosen weights
SCORECARD
Scorecard uses qualitative traits, therefore is the least accurate of the 3
15.00% methods, as the other 2 use quantitative methods which are more reliable.
VC METHOD
The VC method is the most used approach for valuing startups, but can only
25.00% use one quantitative measure at a time thus reducing its accuracy.
DCF with LTG
DCF is the most renowned approach to company valuation, as it takes account
of all financial information of a business. However, it cannot be used on its own
60.00% because qualitative measures should also be considered.
Qualitative information is more important in early stage companies, where performance
uncertainty is extremely high, hence the basis for its Inclusion.
11.2 Scorecard Method
Legwork Herald is an early stage startup operating in the errand/personal services
industry which is still emerging, hence the reason for the relatively low scores.
Weighting and scores of the criteria with breakdown in traits:
Parameters
Management Team
How experienced are the founders?
Single founder / team?
Weighting
Assumed scores
Factor
5%
20%
0.01
5%
20%
0.01
15%
0.01
5%
30%
0.02
5%
15%
0.01
Timing of the Opportunity
Is the market ready yet – too late / too
early?
5%
Size of the Opportunity
Target market, first mover?
Scalability?
Product / Technology
Easy to copy? Barriers to entry? IP?
Competitive Environment
A lot of competitors? Their strength?
Legwork Herald Ltd, Valuation Report.
18
Marketing/Sales
Channels/Partnerships
Go-to-market strategy? sales
contracts signed?
Other
Hiring capabilities, Access to funds,
etc.
5%
20%
0.01
5%
15%
0.01
0.07
The Average Valuation was derived from the following specimen companies.
NAME
Taskrabbit
SOURCE
DEAL: Eden Life closes $1.4 million seed round to develop home
$2,000,000 services app, others - Nairametrics
TaskRabbit Stock Price, Funding, Valuation, Revenue & Financial
$52,860,000 Statements
Mubawab
$136,000,000 Mubawab company information, funding & investors | Dealroom.co
Eden life
Swvl
CloudFret
AVERAGE
VALUATION
$1,500,000,000 Swvl Stock Price, Funding, Valuation, Revenue & Financial Statements
$20,000,000 Morocco’s Cloudfret raises $1 million to back expansion - Wamda
$342,172,000
● Eden Life - Eden Life is a tech-enabled service that puts your home's chores on
autopilot.
● Taskrabbit - Taskrabbit is an online and mobile marketplace that matches
freelance labor with local demand, allowing consumers to find help with everyday
tasks, including furniture assembly, moving, delivery, and handyperson work.
● Mubawab - Mubawab is a real estate classifieds portal for the Middle East and
North Africa.
● SWVL- Swvl is revolutionizing the transportation scene in emerging markets,
through providing a technology based alternative to public transportation.
● CloudFret - is a digital platform that links the two shores of the Mediterranean by
connecting shippers to an extensive and reliable network of carriers from Europe
and Africa
Legwork Herald Ltd, Valuation Report.
19
11.3 VC method
Below are the sources of the valuation parameters used in the VC Method: EBITDA
Multiple and Annual Required ROI, and their default values provided by the Valuer.
EBITDA multiple:
The 18x multiple is risk adjusted figure determined by the Valuer and is available at
EBITDA Multiples by Industry | Equidam
Annual Required ROI:
The annual required ROI of 40% falls within the range of returns investors require from
early stage startups, and is available at Discounting - Overview, Formula, Types, and
Uses
11.4 DCF with LTG (Long term growth)
Below are the assumptions and sources of the valuation parameters used in the DCF with
LTG method:
5 Yr Discount rate
40%
Terminal Discount rate
153%
Terminal Growth rate
1%
Free Cash Flow to
Equity
Cash flow Basis
Discounting - Overview, Formula, Types, and Uses
Provided by the valuer: A 153% Terminal Discount rate is
used in order to account for the risk and uncertainties
associated with the Terminal cash flows.
This is a risk adjusted rate available from Terminal Growth
Rate
This was derived from the financial forecasts
5 Yr
Terminal
Risk free rate
12%
12%
Risk Premium
11%
100%
Inflation rate
13%
13%
Nominal discount rate
40%
153%
11.5 Exchange rate
The official Exchange rate of NGN440 to 1USD is used in order to take account of future fluctuations in
exchange rates.
11.6 Revenues:
Legwork Herald operates in the errand/personal services sector which cuts across a
number of industries and plans a target share of 0.04% which is expected to yield
$10,000,000 in revenue by year 1 after the fund raise and grow at a CAGR of 9.7% up
until year 5. These markets have been narrowed down to three main sectors shown
Legwork Herald Ltd, Valuation Report.
20
below including their coverage, projected revenues, targets, 5 year CAGR and
information sources.
TOTAL
PROJECTED
TARGET
TARGET MARKETS COVERAGE REVENUE (2023)
%
PropTech
Global
$21,257,600,000.00
0.02%
Concierge
Global
$845,191,326.80
0.65%
Logistics
MEA
$2,458,538,740.00
0.01%
TOTAL / AVERAGE
$24,561,330,066.80
TARGET
REVENUE
(YEAR 1)
5 Yr
CAGR
SOURCE
PropTech Market Size,
Industry Share & Trends
$4,251,-% - 2032
Concierge Services
Market Size, Share &
$5,502,-% Forecast-
Middle East and Africa
Secure Logistics Market
Forecast to 2028 - By
Size, Share, Growth by
$245,-% End User and Forecast
0.04% $10,000,000.00
9.07%
11.7 Profit Margins:
The Gross profit margin in year 1 is an average of Legwork Herald’s Q3 2022 gross
profit margin of 68.61% and the Q3 2022 industry average available at Personal Services
Industry Profitability by quarter, Gross, Operating and Net Margin from 3 Q 2022. This is
forecasted to grow by 200 basis points year on year up until year 5.
The Net profit margin in year 1 is an average of Legwork Herald’s Q3 2022 net profit
margin of 17.32% and the Q3 2022 industry average available at Personal Services
Industry Profitability by quarter, Gross, Operating and Net Margin from 3 Q 2022. This is
forecasted to grow by 200 basis points doubling year on year up until Year 4 and become
relatively stable at 200 basis points in year 5.
11.8 Depreciation, Taxes and Working capital:
For the purpose of this valuation, Non-current assets are assumed to have an estimated
useful life of 5 years which forms the basis for their depreciation.
Tax liabilities are assumed to have been fully settled by the end of the following year at an
effective tax rate of 20%.
Account receivables and payables are assumed to have been fully settled by the end
of the following year.
Legwork Herald Ltd, Valuation Report.
21
