By using the Hybrid Growth Diligence approach, we validated the resilience of the target’s business model by testing:
- The robustness of its historical growth trajectory, through understanding various revenue streams, including the different ARR layers;
- Rationale and dependence on set-up and integration, which can be significant in FinTech and affect margins;
- The balance of its R&D spending, which can be consequent for software firms where innovation must constantly be pushed and compliant with changing regulations.
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 challenging the sell-side adjusted EBITDA aggregate (i.e. “QOE” analysis), on which valuation was based, together with performing an enterprise-to equity valuation bridge with a dual financial and legal perspective.