About the Target
Project Lab is a genetic and diagnostic health testing company direct to consumers, where its products help to identify health risks with the use of a DNA sequencing technology.
The Challenge
Our UK based VC fund partner was looking to invest in the Series C round, where the company is valued at approximately USD 140million.
We were engaged to perform a Financial Due Diligence on the target company before the VC fund pulls the trigger on the investment.
Our Solution
We supported the VC Fund to perform a Financial Due Diligence to assess the business risks of the target company via understanding of the major business processes.
1. New investments or business lines of the group
- Understood the newly established co-operations and analyzed the consolidation process of the new businesses and the original group.
2. Revenue
- Understood and discussed the revenue model for different revenue streams, and obtained contracts to assess the accounting revenue recognition policies used.
3. Direct Costs
- Conducted analysis on the increase or decrease in direct costs.
- Reviewed the burn rate and reported on the significant direct costs
- Inquired management on next year’s budget and analyzed the reasoning of the assumptions based on historical figures
4. Operating expenses
- Analyzed the increase or decrease in operating expenses and reported significant findings.
Result
The deal was successfully completed. The VC Firm invested into the Target due to its growth potential, and this turned out to be an investment that flipped 10 times its value up to date.
The VC Firm appreciated our knowledge in both HK and China companies, and the ability to perform high quality review on financials tied with operation results, within a short period of 5 days.
