In early February AZS Consulting has signed an agreement with Josudo, Southeast Asian company that is present in Esport industry, for company valuation services. Josudo is a leading company in the Southeast Asian market that organizes continues mini-tournaments and provides coaching services for its clientele. It was an exciting and interesting journey, despite all the COVID-19 outbreak throughout the world AZS Consulting was able to deliver the results in a timely manner.
Feedback from Josudo:
We are very proud to showcase our excellence to Josudo and provide them with keen information in their future growth.
While conducting the valuation the most important factors are the assumptions and inputs that would be utilized. While having a discussion with Josudo the consultant kept a neutral unbiased approach and took a position of a potential investor, stress testing Josudo on every step of the way and ensuring the company's long-term survivability that would provide immense value to the team and company's shareholders. Our belief is that the following valuation approach is the most accurate in the fast-developing and overvalued sphere such as esports and we are historically proven that the company that takes a strategic approach to every action are the ones who thrive in the long-term.
Note: It is always important not to implement overexaggerated burdens on the company as only 18.85% of the companies survive the first year.
Based on the structured assumptions where our consultant projected revenue, variable and fixed costs AZS Consulting was able to construct Financial Statements.
The Financial Statement consists of three documents: Income Statement, Balance Sheet and Cash Flow Statement. All three documents are interconnected and showcase the overall business and financial situation of the company.
The final step would be to construct the valuation. Important factors that the majority of professionals miss is that the valuation should not be based on a single methodology, rather than utilization of multiple methodologies that would provide a range of confidence. The aim is to exclude all potential outliers that may diverge the metric significantly. Upon definition of the valuation range, the consultant may apply certain additional constraints to the business for a final stress test which would provide the most realistic fair value of the company.
AZS Consulting would recommend building DCF based on the long-term growth rate, not strongly on multiples utilizing the following formula:
Free Cash Flow is the initial investment
n is the year
It has been an absolute pleasure collaborating with Josudo, the team has showcased professional excellence. The team consists of individuals coming from a different background that creates an outstanding atmosphere of different points of view that can challenge one another. No matter how many barriers AZS Consulting put on Josudo's metrics the company that they can survive and thrive throughout the years, the consultant believes that the following is an attribute to the team itself and approach to business growth.