My Job Opportunity Keeps Going Down with the Valuation

As noted previously I have been brought on as a consultant to help a due diligence team in an acquisition. The deal is that if the acquisition goes through, I will be brought on as a full time employee to run the new division.

That's quite a carrot to make the thing go through, but the catch is that I have to make the acquisition work after it's done. In other words, if I don't make the new division live up to the forecast I created for it during due diligence, my job will be short lived.

So the CFO and I have been batting the valuation for the "acquiree" back and forth for the last few days. My number started off high, being the optimistic marketing guy that I am. His number started off low, being the pessimistic bean counter that he is. The problem is that as we went through the differences in our models, he convinced me to take his side a lot more than I convinced him to take mine.

So the valuation keeps going down with each revision (we are now on "E"). That is normally a good thing since this means the price of the company - and thus the acquisition cost - keeps going down, but the problem now is that the latest revision valuates the company lower than the last round put into it by the VCs. In other words, we are at a valuation that is lower than what the investors put into the company.

Now this includes only one aspect of the company: the net present value of future cash flows (NPV). This leaves out of the calculation certain assets on the company's balance sheet that we would jettison, cash on hand, and other items that would actually increase a negotiated sales price.

So maybe it's not a lost cause, but I think the probability of the acquisition going through - and my permanent job prospects with this company - went down with each revision of the spreadsheet.