The so-called venture capital valuation method (more on that here) requires the ability to estimate cashflows over a period of several years and to determine what the exit value is going to be. Making reliable forecasts if there is no historic performance to base your future projections on and, as often is the case with new technology startups, when there are hardly any comparable companies available to use as a proxy may be tricky. The Dave Berkus method, a much less mathematically rigorous approach, offers a possible alternative. Read more...

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Researchers usually identify two waves of increased M&A activity over the last 25 years. The first one took place in the 1990s, whereas the second transpired in the years leading to the global financial crisis of 2008. A recent research report (a full version of which is available here) published by Swiss Re, a reinsurer, offers a very comprehensive analysis of the factors driving the M&A activity in general and deal activity in the insurance sector in particular. Read more...

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A significant part of the M&A transaction activity in the Baltics last year measured by volume was generated by the financial services sector. The Polish insurer PZU acquired the RSA Insurance Group operations in the region while a group of investors led by Ripplewood Advisors took controlling interest in Citadele Banka AS, to name but a few. Both deals can be used to illustrate some of the prevailing European financial services M&A market trends last year - growth-seeking firms picking up sub-optimal size and non-core operations of their peers in intra-European transactions and financial buyers pushing into the financial services sector. Read more...

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Life moves in mysterious ways indeed. After years of almost complete obscurity Alta Capital, the symbol of aggressive private equity deal making during the 2000s, has suddenly resurfaced and reminded about itself. Just a week ago we had to mention it when talking about the past ownership of Graanul Invest, the publicity-shy Estonian producer of wood pellets (more on that here). This week has started with the news about Rigas Piensaimnieks SIA, a Latvian dairy products manufacturer, another chapter in Alta Capital stories. Read more...

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Some call it the funhouse Hall of Mirrors in the world of financial reporting. Charlie Munger from Berkshire Hathaway goes even further by calling it the “bullshit earnings”. Technically “EBITDA” is an abbreviation that stands for earnings before interest, taxation, depreciation and amortisation. The beginnings of its widespread application date back to 1980s and to the wave of leveraged buyouts in the US when EBITDA offered a quick way to estimate a company’s ability to take on and service debt. Read more...

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