Review valuation advisory cost and fundraising dilution together
A business valuation proposal is not only the price of a report.
In a primary financing, the value conclusion flows into issue price, new-share count, investor ownership, and dilution, while retainers and success fees reduce the cash that actually reaches the company.
This calculator builds low, base, and high value cases using simplified DCF, EBITDA multiples, or revenue multiples, then connects them to advisory cost, net proceeds, and a single primary equity round.
The central discipline is to keep contractual dilution separate from fee leakage.
If gross investment and pre-money value stay fixed, a higher advisory fee does not reduce the investor’s contractual percentage; it reduces net company proceeds and financing efficiency per percentage point diluted.
Decisions this model can support
Primary equity fundraising
Connect gross investment and pre-money value to issue price, new shares, investor ownership, and the percentage existing holders retain.
Secondary-share preparation
Organize advisory scope and a value range while reviewing the actual secondary price, taxes, representations, and closing terms separately.
Stock-option planning reference
Explore an internal value range without treating the output as a statutory exercise price, tax value, or accounting measurement.
In-kind contribution or restructuring preparation
Plan evidence, methods, deliverables, and budget before commissioning formal work without predicting approval, inspection, or tax treatment.
Separate enterprise value from equity value
Enterprise value is the starting indication for the operating business, while equity value is the amount attributed to holders after the selected capital-structure bridge.
The calculator adds cash and non-operating financial assets, then subtracts debt and user-selected debt-like claims.
Real engagements may debate whether leases, shareholder loans, preferred claims, unpaid bonuses, working-capital adjustments, or non-operating assets belong in that bridge, so record the exact boundary beside every result.
Core bridge
Equity value = enterprise value + cash − debt
Post-money equity value = pre-money equity value + gross primary investment
Three valuation methods and their limits
EBITDA multiple
The method multiplies reference EBITDA by a comparable multiple reviewed by the user.
Comparability can break when capital intensity, growth, recurring revenue, one-time items, accounting policy, or required reinvestment differ materially.
If EBITDA is zero or negative, a positive multiple does not produce a useful positive value, so cross-check revenue, detailed DCF, asset evidence, and actual transactions.
Revenue multiple
Revenue multiples can create a scenario before profit stabilizes, but equal revenue does not mean equal economics.
Gross margin, customer concentration, growth quality, churn, cash burn, and future capital needs can justify very different values.
Treat the revenue multiple as a transparent comparable-data assumption, not a substitute for profitability and cash-flow analysis.
Simplified DCF
The calculator grows year-one free cash flow at one explicit rate, discounts each year, and adds a Gordon-growth terminal value.
It does not accept separate annual revenue, margin, tax, working-capital, or capital-expenditure schedules, so it cannot replace the detailed DCF in a professional engagement.
A narrow gap between discount rate and terminal growth can make terminal value dominate the answer; always inspect low, base, and high discount-rate cases and the terminal-value present value.
Simplified DCF formula
Explicit cash flow
FCF(t) = year-one FCF × (1 + growth)^(t − 1)
Explicit FCF PV = Σ FCF(t) ÷ (1 + discount rate)^t
Terminal value
Terminal value = FCF(n) × (1 + terminal growth)
÷ (discount rate − terminal growth)
Discount-rate condition
Even the high-value discount rate, calculated as base rate less the sensitivity in percentage points, must be positive and above terminal growth.
The interface reports an input error instead of silently clamping an invalid combination.
Break the advisory proposal into payment events
A one-line advisory quote is difficult to compare unless deliverables and payment conditions are separated.
The model combines retainers, milestone fees, and other direct costs as fixed advisory cost, then calculates a separate success fee as a percentage of gross primary financing.
If the real contract applies its rate to enterprise value, equity value, an increase above a threshold, collected proceeds, or a minimum-and-cap structure, calculate the expected payment on that contractual basis before using this field.
- Retainer: diagnosis, kickoff, scoping, and evidence collection paid regardless of outcome
- Milestones: financial model, draft, final report, presentation, or acceptance payments
- Other direct cost: diligence, databases, translation, travel, tax, and quote exclusions
- Success fee: contingent amount triggered by the event and base defined in the contract
Pre-money, post-money, and dilution formulas
Pre-money is the equity value immediately before new investor cash; post-money adds gross primary investment.
Dividing pre-money by pre-round fully diluted shares gives the issue price, and dividing investment by that price gives new shares.
The term sheet must determine whether an option-pool increase and convertible instruments enter the pre-round denominator, because those ordering rules can materially change ownership.
Issue price = pre-money equity value ÷ pre-round shares
New shares = gross primary investment ÷ issue price
Investor ownership = investment ÷ (pre-money + investment)
Existing ownership retained = pre-money ÷ (pre-money + investment)
Worked KRW and USD examples
The Korean fictional default applies an 8× multiple to KRW 300,000,000 of EBITDA, producing KRW 2,400,000,000 of enterprise value.
Adding KRW 500,000,000 of cash and subtracting KRW 300,000,000 of debt produces KRW 2,600,000,000 of pre-money equity value.
With KRW 1,000,000,000 of gross primary investment, post-money is KRW 3,600,000,000 and contractual dilution is 27.777778%.
Fixed advisory cost is KRW 30,000,000 and a 2% success fee is KRW 20,000,000, leaving KRW 950,000,000 of net proceeds.
Korean KRW and English USD default valuation, fee, financing, and dilution examples| Default set | Enterprise value | Pre-money equity | Advisory cost | Net proceeds | Dilution |
|---|
| Korean KRW example | KRW 2,400,000,000 | KRW 2,600,000,000 | KRW 50,000,000 | KRW 950,000,000 | 27.777778% |
| English USD example | USD 3,150,000 | USD 3,450,000 | USD 82,500 | USD 1,417,500 | 30.30303% |
The independent USD default uses USD 450,000 of EBITDA at 7×, USD 700,000 of cash, USD 400,000 of debt, and USD 1,500,000 of gross financing.
Pre-money is USD 3,450,000, post-money is USD 4,950,000, issue price is USD 1.725 on 2,000,000 pre-round shares, and approximately 869,565.217391 new shares produce 30.30303% investor ownership.
These independent currency examples are not exchange-rate conversions, market observations, or recommended terms.
Interpret valuation sensitivity before negotiating ownership
Moving the Korean default 8× multiple by ±20% creates 6.4×, 8×, and 9.6× cases.
After the same net-cash bridge, pre-money values are KRW 2,120,000,000, KRW 2,600,000,000, and KRW 3,080,000,000, while dilution on the same KRW 1,000,000,000 raise is 32.051282%, 27.777778%, and 24.509804%.
A higher headline value is not automatically a better overall deal because liquidation preference, participation, anti-dilution, conversion, governance, option-pool sizing, and future financing capacity can change economics and control.
- Confirm that the low-value case still leaves enough net proceeds to reach the next operating milestone.
- Document every comparable, adjustment, forecast owner, and source behind the base case.
- Check whether the high case depends on an unusually low discount rate or an overwhelming terminal-value contribution.
- Model non-price rights and option-pool ordering in a separate cap-table and waterfall analysis.
Seven-step workflow
- Select the real purpose: fundraising, secondary planning, compensation reference, in-kind contribution preparation, or internal review.
- Set one valuation date and currency, then align revenue, EBITDA, FCF, cash, and debt to the same accounting boundary.
- For multiples, preserve comparable and adjustment evidence; for DCF, preserve cash-flow, growth, discount-rate, and terminal-growth support.
- Split the advisory proposal into retainer, milestones, direct exclusions, success-fee base, minimum, cap, and tax.
- Align gross primary investment and pre-round fully diluted shares to one term-sheet cap-table definition.
- Save low, base, high, and fee ±20% outputs instead of relying on one precise-looking result.
- Update the model, date, and evidence owner when the professional report, forecast, fee quote, or term sheet changes.
Material rights outside this calculator
Preferred financing economics cannot be summarized by ownership percentage alone.
Liquidation preference, participation, conversion, anti-dilution, redemption, dividends, board rights, protective provisions, and transfer rights can change both proceeds and control at the same stated percentage.
- Pre-money versus post-money option-pool increases and ungranted options
- SAFE and convertible-note discounts, valuation caps, interest, and conversion ordering
- Multiple preferred classes, conversion ratios, and liquidation preferences
- Earn-outs, warrants, milestone shares, and adviser equity compensation
- Mixed primary and secondary rounds where company proceeds differ from total transaction size
Pre-engagement evidence checklist
✓Verify that you Define purpose, basis of value, valuation date, currency, intended users, and distribution limits in writing.
✓Verify that you Identify methods performed, methods excluded, and the reason each method fits the available evidence.
✓Verify that you Preserve comparable selection, outlier treatment, and size, growth, profitability, and risk adjustments.
✓Verify that you Confirm forecast version, management interviews, sensitivity, and evidence-validation scope.
✓Verify that you Reconcile the enterprise-to-equity bridge for cash, debt, debt-like claims, and non-operating assets.
✓Verify that you Separate retainer, milestones, success fee, minimum, cap, tax, expenses, cancellation, and refund terms.
✓Verify that you List draft, final report, model files, presentations, revisions, acceptance criteria, and delivery dates.
✓Verify that you Review third-party reliance, liability limits, confidentiality, retention, deletion, reuse, and conflicts.
Frequently asked questions
Does paying advisory fees from the round reduce dilution?
No. If pre-money and gross investment are unchanged, contractual investor ownership is based on gross investment. Advisory fees reduce net company proceeds and financing efficiency, not that stated percentage.
What amount should the success-fee rate use?
Read the contract. The base may be gross commitments, collected cash, value above a threshold, enterprise value, or a minimum-and-cap formula. Convert the real clause to an expected payment before using a different simplified base.
Can I use an EBITDA multiple when EBITDA is negative?
A positive multiple applied to negative EBITDA does not create a useful positive operating value. Cross-check revenue, detailed DCF, assets, milestones, and observed transactions with a qualified valuer.
Is the DCF discount rate always WACC?
WACC is a common starting point for enterprise free cash flow, but the correct rate depends on the cash-flow definition, capital structure, risk, currency, and purpose. This calculator does not estimate it.
Should ungranted options be included in pre-round shares?
Use the fully diluted definition in the term sheet. The treatment and timing of ungranted pools, granted options, SAFEs, notes, and preferred conversion can materially alter issue price and dilution.
Is a higher valuation always better for existing holders?
It reduces immediate percentage dilution when investment and rights are equal, but an unsupported value can increase milestone pressure, down-round risk, or restrictive terms. Review price and non-price rights together.
Can this output set an option exercise price or tax filing value?
No. It is an internal scenario, not a statutory, tax, accounting, compensation, fairness, or formal appraisal conclusion for any jurisdiction.
Official methodology references and model boundary
This is a global, user-entered planning model, not a statutory-rate table or a database of market multiples and advisory prices.
The following official materials support the boundaries for purpose, basis, method choice, input provenance, documentation, complete cost, and sensitivity only.
- The current International Valuation Standards from IVSC set out the General Standards and the structure that includes IVS 200 Businesses and Business Interests.
- IVSC’s official explanation of IVS 200 describes business valuation as structured judgement over purpose, basis, inputs, models, and reporting rather than one universal formula.
- The IFRS Foundation supporting material for unquoted equity under IFRS 13 illustrates comparable multiples and DCF, but the educational material is not itself an official requirement of IFRS 13.
- U.S. GAO-20-195G supports documented scope, assumptions, data, complete cost, sensitivity, risk, and updates with actual evidence.
References were checked on August 8, 2026.
The result is not an IVS-compliant report, IFRS fair-value measurement, tax or statutory value, fairness opinion, investment recommendation, legal advice, accounting conclusion, or contract review.
A defensible range matters more than a precise-looking point estimate
Align the valuation date, financial evidence, comparables, discount-rate support, advisory scope, and cap-table definition before entering values.
A conclusion that remains understandable across low, base, high, and fee-sensitivity cases is easier to explain, negotiate, revisit, and improve.