Why we have company valuations externally plausibilized
Friday, February 6th, 2025
Reading Time: 3 min
OOMNIUM relies on an independent plausibility check by BV4, a leading independent expert in startup scouting, assessment and valuation, to ensure fair and realistic company valuations for public financing rounds. For the following reasons:
Advantages for Investors:
Share price: When a company is overvalued, investors pay too much for their shares or receive too little equity in the company. Example:
- The company is realistically valued at CHF 10 million.
- An investor invests CHF 1 million.
- The investor would therefore receive 10% of the company.
- However, if the company is overvalued, say at CHF 20 million, the investor will only receive 5% of the company for the same million.
Protection against overvaluation: Independent valuers such as BV4 help to avoid overvaluations to the detriment of investors, but also protect the company from financing problems in the next financing round, which is also in the interest of investors.
Balancing information asymmetries: Independent valuations and plausibility checks create transparency and help to balance the company's information advantage.
Building confidence: Reliable, plausible valuations are especially important for non-professional investors without in-depth market knowledge.
Benefits to the Company:
Credibility: An independent plausibility check gives the valuation more credibility in the eyes of potential investors.
Realistic target setting: Appropriate valuations encourage sustainable and realistic growth targets, which usually lead to better financial results in the long run.
Investor Attractiveness: A fair valuation makes the company more attractive to investors.
Conclusion: We believe that a public financing round is a very strategic way to fund growth if you want to maximize the reach of your brand and turn your community into ambassadors at the same time. Internationally successful companies like Brewdog and Revolut have long shown how it's done. A realistic company valuation is essential to the success of a public funding round. By providing an external, independent plausibility check of the company's valuation, we ensure that the interests of both investors and the company are considered and protected.
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