[Case Solving] Valuation: what are the factors you could used to assess a start-up

Bain & Company BCG Case Interview casing McKinsey Strategy case solving Valuation
New answer on May 14, 2022
4 Answers
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Anonymous A asked on May 13, 2022

Hello everyone,

What would a great structure to assess start-ups like self-driving?Would 3C1P work in this case?

Thank you in advance.

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Lucie
Expert
replied on May 14, 2022
10+years of recruiting & top BCG trainer & BCG Project leader & experienced hire & Pricing and Revman expert

Hi there, 

each of us can eventually a use different approach to solving the case… this is precisely what consulting looks for, not standardized frameworks (that usually limit the options), but a new way and out of the box ideas, eventually a combination of different frameworks that would fit this particular case… If standardized frameworks would solve complex problems that MBB solve, companies will unlikely to hire them.


I would recommend putting the CEO hut and thinking how would you approach it if you would want to buy such a start-up? What things would you look at to maximize the investment?

Good luck, 

Lucie

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Florian
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replied on May 13, 2022
#1 rated McKinsey Case and PEI Coach | 5 years at McKinsey | Mentorship Approach | 530+ McK interviews in 2021

Hey there,

My clarification question to the interviewer would be:

Do we want to put a value on the company or just list qualitatitive factors that we should look at?

If you want to create a valuation, you would for instance need to estimate the earnings potential of the company (including a multiple). In that case, 3C1P would not work but rather a type of market sizing approach including a plausible market share assumption for the company.

If you want to qualitatively evaluate the business, 3C1P could work but likely won't impress the MBB interviewer. Case interviews for top-tier firms are about understanding a problem and deriving a creative approach / solution, not about memorizing frameworks or books.

Try to come up with your own approach and be sure to make it very concrete and tailored to the situation.

Cheers,

Florian

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Ian
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updated an answer on May 14, 2022
BCG | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

It's going to depend on the context of the start-up and the answers to my clarifying questions!

The 4 Ps can work. As can Market/Product/Customer/Competition. You can use a financial model leveraging current + projected cashflows. You can do external/internal.

Many options here!

(edited)

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Clara
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Content Creator
replied on May 14, 2022
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

In these cases I always tell the same: why don´t you give it a shot, write your response as if this was the interview day and then ask the community? I assure you that you will learn so much more this way, and it will prep you better for interview day. 

Cheers, 

Clara

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Lucie gave the best answer

Lucie

10+years of recruiting & top BCG trainer & BCG Project leader & experienced hire & Pricing and Revman expert
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