At a glance
- Instruction type: Independent valuation to determine the proportionate equity split between two Operating Companies, based in separate jurisdictions, ahead of a bridging rights issue.
- Subject interest: A two-entity group structure, with one of the Operating Companies holding
100% of a wholly owned subsidiary in a separate jurisdiction and a 35% interest in a joint
venture. - Methodology: Sum-of-parts discounted cash flow, cross-checked against comparable
revenue multiples. - Outcome: A fully documented, independent report delivered within two weeks, establishing
a defensible cross-border split for the rights issue allocation.
Background and instruction
The group operating structure comprises two entities: an Operating Company holding the existing
client relationships and generating the bulk of current trading revenue, and a second Operating
Company, based in a separate jurisdiction, established as the vehicle for international expansion,
itself holding a wholly owned subsidiary in a further jurisdiction and a 35% joint-venture interest in
a company in a separate region.
Ahead of a bridging rights issue intended to fund the group through to its next capital round, the
board needed an independent, arm’s-length basis for allocating the investment between the two
Operating Companies, since existing and incoming shareholders held different economic
interests in each. bizval was instructed to determine that proportionate split, as at a valuation
date of 30 April 2026, by reference to the independently assessed fair market value of each entity
on a going-concern basis, and to deliver a fully documented valuation report within two weeks.
Key challenges
Challenge: The two entities sat at very different stages of maturity, with one already profitable
and the other newly established, pre-revenue in parts, and reliant on an unproven go-to-market
plan.
Resolution: Each entity was given its own discount rate build-up and its own explicit forecast
period, rather than a single group-wide rate or a blended valuation, so the differing risk and growth
profiles were reflected directly rather than averaged away.
Challenge: Cash flows were generated and reported across four currencies, and a single,
defensible group value required consistent translation at a specific valuation date.
Resolution: All entity-level cash flows were translated to a single reporting currency using
externally sourced spot rates as at the valuation date, with the translation basis documented
alongside every other assumption.
Challenge: The second Operating Company’s growth trajectory, and by extension its share of the
total split, rested on a forecast with no trading history behind it.
Resolution: The forecast was tested against signed pipeline contracts and the board-approved
go-to-market plan, and cross-checked against comparable transaction multiples, rather than
accepted on management’s assertion alone.
Valuation complexity
- Two entities at very different stages of maturity. The first Operating Company was already EBITDA-positive on existing contracted and pipeline revenue; the second Operating
- Company was newly established, pre-revenue in parts, and loss-making in its first year as it built out its go-to-market capability. Each required its own discount rate build-up rather than a single group-wide rate.
- Cross-currency cash flow modelling. Each entity’s cash flows were modelled in its own
functional currency, reflecting its jurisdiction of operation. A single, defensible group value
required consistent exchange rate assumptions and careful translation at the valuation date. - Jurisdiction-specific risk premiums. The first Operating Company’s discount rate reflected
local sovereign risk and a funding-risk premium, reflecting that its EBITDA profitability had
not yet translated into self-sufficient working capital and growth funding, tied to its continued
reliance on group funding ahead of its next institutional round; the second Operating
Company’s rate reflected a market-entry risk premium for its largely unproven footprint in
new geographies, an assessment informed by signed pipeline contracts and a boardapproved go-to-market plan. Neither could be derived from a single, off-the-shelf market
rate. - Revenue based on contracted and pipeline value, not trading history. Neither entity had
an extended trading history. Revenue was modelled from contracted and pipeline client
value rather than audited historical trading, requiring careful validation of the underlying unit
economics, including client counts, contract escalation and churn assumptions.
bizval’s approach
bizval adopted a sum-of-parts discounted cash flow methodology as the primary approach,
valuing each entity independently over a multi-year explicit forecast period that reflected its own
revenue model, cost structure and risk profile, before aggregating to a single group equity value as
at the valuation date. A revenue-multiple cross-check against comparable transactions was
applied as a secondary reference point; it was not weighted into the indicated value, though it fell
within a broadly consistent range of the sum-of-parts outcome and supported rather than
displaced the primary conclusion. The second Operating Company’s 35% joint-venture interest
was included on a look-through basis, its proportionate share of the venture’s forecast cash flows
folded directly into the second Operating Company’s consolidated cash flow model; no separate
minority discount for lack of control or marketability was applied, consistent with the goingconcern, fair market value basis adopted throughout.
Each entity’s discount rate was built up from first principles, using externally sourced risk-free
rates and equity risk premiums, together with jurisdiction-specific adjustments for size, funding
risk, customer concentration and market-entry risk. Every assumption and its source was
documented to a standard suitable for board and shareholder scrutiny.
bizval worked directly with group management throughout the engagement to validate the
underlying financial model, forecast assumptions and corporate structure, and clearly flagged the
outstanding qualifications, including the intercompany recharge arrangements between the two
entities.
Why this approach: bizval considered the standard alternatives before adopting sum-of-parts
discounted cash flow. An asset-based approach did not fit, as neither entity’s value derives from
its underlying assets. Earnings multiples (EBITDA, revenue, precedent transactions) were
considered but not adopted as the primary basis, as reliable comparables were limited,
particularly for the newly established entity, which had no earnings history to apply a multiple to.
A single consolidated DCF was also ruled out, since the two entities sat at different stages of
maturity with different risk and growth profiles, and modelling them together would have forced
one discount rate and one growth trajectory onto businesses that shared neither.
The outcome
bizval concluded an independent group equity value of approximately USD 22.6 million as at the
valuation date, split approximately 61% to the first Operating Company and 39% to the second
Operating Company, reflecting the first Operating Company’s existing profitability and larger
current earnings base set against the earlier-stage growth trajectory attributed to the second
Operating Company’s international expansion. A sensitivity analysis was included to show how
the split would move under alternative discount rate and growth assumptions.
The report was delivered within two weeks of instruction and gave the board a fully documented,
independent basis for allocating the bridging rights issue between the two entities, with the
outstanding legal and tax qualifications clearly set out ahead of completion.
Value split
| Entity | Equity Value (USD M) | % of Group |
| First Operating Company | 13.8 | 61% |
| Second Operating Company | 8.8 | 39% |
| Group total | 22.6 | 100% |
What this demonstrates about bizval
Multi-entity, multi-jurisdiction capability
bizval valued interests across multiple jurisdictions, including a wholly owned subsidiary and a
joint venture in a separate region, within a single coherent group valuation, with each entity
independently modelled but aggregated on a consistent basis. Our valuation capability is not
limited to single-entity, single-jurisdiction instructions.
Rigour for growth-stage and pre-profit businesses
We are comfortable applying discounted cash flow methodology to businesses with a limited
trading history, working from contracted and pipeline revenue, with every assumption explicitly
documented and cross-checked against market-based comparables.
Independence stakeholders can rely on
bizval had no financial interest in the outcome and charged no contingent fee. That independence
meant the cross-border split reflected an objective, arm’s-length conclusion rather than a
position advocated by either party to the rights issue.
Disclaimer: figures have been rebased and identifying details altered to preserve client confidentiality; the
methodology described is as applied