Inarva Valuation Framework

M&A · USA / North America · 2025–26
USD / INR ₹
Bucket 1 Revenue & Profit
Total revenue for the period
After all operating expenses
% of revenue that is recurring
Bucket 2 Accounts Receivable
Outstanding invoices raised
Committed future revenue
Bucket 3 Pipeline
Unsigned opportunities in flight
Unqualified / future opportunities
Risk Adjustment
Drives customer concentration discount
Retainer revenue won't transfer with the company — discount = % × 0.40
Bucket 4 Human Capital — Resources

Add each team member. Level 1 = 1.5× · Level 2 = 2.0× · Level 3 = 2.5× of Total Compensation.

Resource Name Skills Level Fixed Pay (USD) Variable Pay (USD) Total Comp
Team Total
Bucket 5 IP — Products & Solutions

Add each product or solution. IP Multiple: 1.5× (Conservative) · 2.0× (Base) · 2.5× (Strategic) — applied to Build Cost.

Product / Solution Name Description / Category Build Cost (USD) Potential Rev (USD) IP Value (Base)
IP Portfolio Total
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Valuation Formula Guide

How each input drives the final number — Conservative · Base · Strategic
Conservative
Base Case
Strategic
Bucket 1 Revenue & Profit
The higher of the Revenue valuation or Profit valuation is used — the model never double-counts. Revenue multiples are blended by the % of recurring revenue you enter.
Component Conservative Base Strategic
Project revenue multiple 0.80× 1.25× 1.75×
Retainer / recurring multiple 1.50× 2.50× 4.00×
Profit multiple 2.50× 3.00× 4.00×
Blended Revenue Multiple = (1 − Rec%) × Project + Rec% × Retainer
Bucket 1 = max(Revenue × Blended Multiple,  Profit × Profit Multiple)
Example: 30% recurring → Blended (Base) = 0.70 × 1.25 + 0.30 × 2.50 = 1.625×
At $100K revenue: Revenue val = $162.5K · Profit val (at $25K) = $75K → take $162.5K
Bucket 2 Accounts Receivable
Near-certain cash — invoices already raised and contracts already signed. A haircut is applied to reflect typical collection risk.
Component Conservative Base Strategic
Unpaid Invoices (AR) AR × 90% AR × 95% AR × 100%
Signed SOWs / Backlog SOW × 85% SOW × 90% SOW × 95%
Bucket 2 = AR (haircut) + SOW (haircut)
AR is valued near face value — the discount reflects bad-debt risk and payment delays. SOW backlog is slightly more discounted because delivery hasn't started.
Bucket 3 Pipeline
Probabilistic future revenue. Active proposals are more likely to close than early-stage forecasts, so they receive higher weights.
Component Conservative Base Strategic
Active Proposals (sent) Pipeline × 20% Pipeline × 30% Pipeline × 45%
Forecasted / Early Stage Forecast × 10% Forecast × 15% Forecast × 25%
Bucket 3 = Weighted Active + Weighted Forecast
Conservative weight reflects typical SMB services win-rates. Strategic weight reflects a buyer who believes they can close pipeline faster with their distribution.
Bucket 4 Human Capital
Acqui-hire value — what a buyer would pay to recruit and ramp equivalent talent from scratch. The multiplier reflects market scarcity and ramp cost by seniority level.
Level Profile Multiplier (all scenarios)
L1 Specialist / Analyst Comp × 1.5×
L2 Senior / Lead Comp × 2.0×
L3 Principal / Architect Comp × 2.5×
Bucket 4 = Σ (Fixed + Variable) × Level Multiplier
HC multiplier is the same across all three scenarios — talent value doesn't change with the deal structure. Only the financial and IP buckets vary.
Bucket 5 IP — Products & Solutions
Replacement-cost methodology: what would it cost a buyer to build equivalent IP from scratch, adjusted for strategic value. Applied to each product's build cost independently.
Scenario Rationale Formula
Conservative Near-replacement value only Build Cost × 1.5×
Base Replacement + moderate strategic fit Build Cost × 2.0×
Strategic Unique IP with high buyer leverage Build Cost × 2.5×
Bucket 5 = Σ Build Cost × IP Multiple (per product)
Potential Revenue entered for each product is for context only — it does not directly affect the valuation. It helps the buyer understand revenue upside beyond build cost.
Risk Risk Adjustment
Two risk factors reduce the pre-total. Both are applied as a single combined percentage discount to the sum of all five buckets.
Customer Concentration Discount
Top client ≥ 50% of revenue − 30%
Top client 40 – 49% − 20%
Top client 30 – 39% − 12%
Top client 20 – 29% − 5%
Top client < 20% No discount
Retainer Non-Transfer Discount
Retainer revenue is relationship-dependent and may not transfer to a new owner.
Discount = Retainer% × 0.40
Example: 30% retainer → 30% × 0.40 = 12% additional discount

Total Discount = CC Discount + Retainer Discount
Applied to: Pre-Discount Total (Buckets 1–5 sum)
Overall Valuation Formula
Step 1 Bucket 1 = max(Revenue × Blended Multiple,  Profit × Profit Multiple) Step 2 Bucket 2 = AR (haircut) + SOW (haircut) Step 3 Bucket 3 = Pipeline (weighted) + Forecast (weighted) Step 4 Bucket 4 = Σ (Comp × Level Multiplier) per resource Step 5 Bucket 5 = Σ (Build Cost × IP Multiple) per product Step 6 Pre-Total = Bucket 1 + 2 + 3 + 4 + 5 Step 7 Discount = Pre-Total × (CC Discount + Retainer Discount) Final Valuation = Pre-Total − Discount