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Enterprise Analyzer provides automatic comparisons between the enterprise of interest and its peer group. For the first time and due to the standardization by which Enterprise Analyzer computes all quantitative metrics, direct comparisons of risk and return metrics are possible with Enterprise Analyzer.
The peer group consists of enterprises that are seeking capital and that are in the same industry sector as the enterprise of interest (noted in the “Enterprise” section). All peer information is presented on an anonymous basis and does not allow access to specific or identifying information about a peer enterprise without proper investor authorization.
The presentation of risk and return for an enterprise and its peers provides a direct comparison of the enterprise and competing peer investment opportunities. Risk is presented as the probability of enterprise failure, which estimates the statistical probability of enterprise failure to its projected fiscal year of liquidity event. Return is presented as the risk-unadjusted IRR, an estimate of the annual internal rate of return for investors in that enterprise, excluding any consideration of risk. Computed in a manner similar to that of risk-adjusted IRR, the risk-unadjusted IRR excludes adjustments for the probability of success to free cash flows and the market-based liquidity value.
By providing the relation between the probability of enterprise failure and risk-unadjusted IRR for an enterprise and its peer group, EquityNet offers the private capital markets an innovation similar to that provided to the public capital markets by the Capital Asset Pricing Model (CAPM) and related Security Market Line.
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