Essay about Apex Investment Partners

814 Words Nov 15th, 2011 4 Pages
1. Why does Apex find AccessLine to be an attractive investment? What are the risks?

Basically, Apex was attracted by the new technology and the unique business model of AccessLine. And, it was at the early stage and was not invested heavily by other professional investors. The positive cash flow was an important factor that makes Apex felt confident. It means that the market actually existed and customers understand the concept of technology, reducing the entry risk. With the domain knowledge in telecommunication, Apex concluded that this was an attractive investment.

When it comes to the risk of investment, the valuation of the firm was requested to be estimated at a high level. However, the market could not respond aggressively
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From this position, it might me possible for Apex to provide practical advices to AccessLine, including a major trend of industry, competition landscape, pricing strategy of other competitors, and demand of customers. The most valuable asset would be the relationship with potential customers, which can be linked to a sales activity.

4. What is an appropriate valuation for AccessLine? Please apply some version of the VC Method to value AccessLine. (Make the best assumptions you can based on available data/information in the case.)

(i) To get the multiple = 3.7 * Our team got the multiple value from comparable public companies’ situation * According to Exhibit 8, there is financial information about those companies. * We calculated ‘EV/Revenue’ of each company and averaged those figures. (ii) Revenue of AccessLine in 1993 = $7,551,090 (iii) Exit value = $27,785,027

5. How attractive are the terms that AccessLine has proposed to Apex for the Series B financing round? What are the key differences from those in the Series A round? What issues, if any, should concern Apex?

Key differences between Series A and Series B: 1. Price: Series A has a price of $7 per unit. On the other hand, Series B has a price of $8 per unit. 2. Protections: Series A provided warrants to purchase an additional 0.15 shares of series A preferred stock at an exercise price of $7

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