By using the Hybrid Growth Diligence approach, we challenged intrinsic value drivers and the resilience of the target’s business model by testing:
- Its historical ability to maintain a stable and high contribution margin on its consultancy activity, that may be affected by pricing power and staff activity rates;
- The existence of a clear scalability of its SaaS platform, in understanding the license gross margin dynamics, affected by security analyst and operator costs that remain critical to run the solution;
- The capacity to generate a positive EBITDA on the long term, with a limited dependency towards continuous R&D, needed to tailor the solution to the ever-changing cyber-threat environment.
This analysis confirmed the target’s ability to deliver sustainable and predictable cash-flow
, which in turn helped our client confirm its investment thesis. The D’Ornano + Co. team further helped the client refine the target’s valuation by performing an adjusted EBITDA analysis (“QOE”), aggregate on which valuation was based.