The Valhalla Partners venture capital firm introduced a new approach to the due-diligence process. An internal due-diligence report analyzes Telco Exchange, a startup company in the IT software space. An extended excerpt examines the trade-offs involved in the new due-diligence process and whether Valhalla should invest in Telco Exchange.
Read the case. Using the information from this week’s lectures and readings (lectures are attached in files) and any additional research you choose to complete, answer the following questions:
1) Should Art Marks vote to make an investment in Telco Exchange? What valuation do you think is appropriate? (There is no wrong answer to the valuation question. Provide rationale/justification for your answer.)
2) Based on the information in the investment memo, what do you think are the top 3 risks facing Telco Exchange?
3) What is your assessment of Valhalla’s due diligence process? In your opinion, what is the most significant benefit of the process? What set of risks does it present?