Last week I attended a course run by Bill Payne from the Kauffman Foundation on valuation and portfolio strategies. It was a terrific session. I particularly liked the activity related to early stage valuation.

Bill introduced us to a web based questionnaire created (and owned) by Cayenne Consulting. This valuation estimator asks 25 questions to help assess your pre-money valuation prior to having a conversation with a VC. Valuing a startup is intrinsically different from valuing established companies. Because of the high level of risk and often little or no revenues, traditional quantitative valuation methods like P/E comparables or discounting free cash flows are of little use. Startup valuations are largely determined based on qualitative attributes.

This is not a bullet proof process but it provides some context to a valuation discussion. You can complete the questionnaire by clicking here here. Enjoy!

I was interviewed late last week by Dr. Mark Bradley, former CEO of ATP-Innovations. Mark believes in the power of technology convergence as a key driver of innovation and is a web 2.0 and technology fanatic.

He interviewed me as part of the Antipodean Podcast series. The Antipodean Podcast was conceived to deliver to the rest of the world stories and developments on science, technology, biotech, medical science, environmental issues and innovations in general that occur in the southern hemisphere - the Antipodes. The podcast can be found here.

It's 48 hours since the announcement about the acquisition of Zookoda by PayPerPost broke. There has been a ton of chatter about the deal. Some of my favourite (and well researched) posts are: TechCrunch, Lockergnome, Andy Beard (nice job Andy!), and Wired. Keep them coming!

Prior to Blue Cove Ventures I was an angel investor investing in some innovative Australian start-ups. One of them was a company called Quivalent who had two products - Quivamail and Zookoda

Today it was announced that Florida based PayPerPost has acquired Zookoda. Here is the announcement:

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ORLANDO, FL - (April 24, 2007) - PayPerPost, the leading marketplace for advertisers to reach bloggers, videographers, photographers, podcasters and social networks, announced today that it has acquired Zookoda, a pioneering provider of blog broadcasting services. Currently used by over 10,000 bloggers around the world, Zookoda keeps readers updated via email whenever their favorite bloggers issue a new post. Over 2.3 million people opt-in to blog newsletters powered by Zookoda technology.

"Zookoda has developed a powerful suite of services to help bloggers increase their online visibility," said Ted Murphy, CEO of PayPerPost. "The huge success Zookoda has had in its short history proves its value to the blogosphere. We're confident Zookoda's capabilities will be of great help to our family of PayPerPost bloggers."

Zookoda, an Australian company, is a free service for bloggers and subscribers alike. Once a blogger signs up for Zookoda's email technology, he or she can send daily, weekly or monthly summaries of the latest blog posts directly to subscriber's email inboxes. The service is a valuable alternative to RSS feeds which require subscribers to "pull" blogs into their accounts; using Zookoda email newsletters, subscribers are automatically notified by email whenever a new blog is posted.

Other Zookoda services include technology that allow bloggers to create eye-catching templates; real-time open, bounce, click and unsubscribe reporting; and a mobile email capability. Automatic subscription forms, incorporating validation and verification functions, allow readers to easily opt-in to a blogger's email newsletter.

"PayPerPost is a well-funded and highly visible company. Its financial backing, and its belief in the power of our technology to promote and strengthen the blogging universe, will benefit our current bloggers as well as PayPerPost's own," said Yorke Hinds, Co-Founder of Zookoda. "We look forward to working closely with Ted and the rest of the PayPerPost team to improve the blogging experience for both creators and subscribers."

As a result of PayPerPost's acquisition of Zookoda, Zookoda will maintain its name, its Web site and all current service offerings. Current Zookoda users will see no disruption in their service. The acquisition is complete and the platform has been transferred to PayPerPost infrastructure.

About PayPerPost: PayPerPost is the leading marketplace for Consumer Generated Advertising. The PayPerPost platform connects advertisers and Consumer Content Creators to deliver compelling marketing messages. The marketplace is fueled by the self expression of bloggers, videographers, photographers, podcasters and participants in social networks. PayPerPost is easier to use than paid-search or display advertising and provides more powerful features. The company is venture funded by Inflexion Partners, Village Ventures and Draper Fisher Jurvetson. Advertisers, Consumer Content Creators and partners are encouraged to join the revolution at www.PayPerPost.com

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Coverage by TechCrunch is here

So you have put your business up for sale, had endless skype conversations with interested parties. You have dropped many potential acquirers; many potential acquirers have dropped you! You have got down to your shortlist of three - done the merry "dance of consumation" and agreed price and terms with your chosen acquirer. Phew! Done, right? WRONG.

You will probably sign an initial MOU (Memorandum of Understanding) or LOI (Letter of intent) which outlines in broad terms what the two parties have agreed. This is just an appetizer for the more detailed (and more complex) Final Sale Agreement.

The Seller has a broad range of obligations. These obligations are set out in the Reps (Representations) and Warranties. These are basically written confirmations by the seller (with documentary proof backing up everything you are committing too) confirming everything that has been negotiated.

Reps and Warranties will include:

• Organisation - Seller is a properly incorporated and registered entity and registered in a particular jurisdiction (and you can prove it!)
• Authority / Enforceability - Seller has the right, power and corporate authority, and each Stockholder has the right, power and legal capacity, in each case, to execute and deliver the Agreement
• Capitalisation - Stockholders have the right to execute this transaction and there are no non-disclosed option agreements hiding in the closet!
• Consents - Each governmental or other registration, filing, application, notice, transfer, consent, approval, order, qualification and waiver required under Applicable Law has been obtained by Seller and can be transferred to acquirer
• Financial Reports - All requested Balance Sheets, P&L's Auditted Accounts etc. have been provided to acquirer
• Books & Records - All books of account, minute books, stock records, and other records of Seller have been provided to acquirer
• Legal Actions - There are no outstanding or pending claims against the companyli>
• Title & Sufficiency of Assets - The Purchased Assets (usually defined in a Schedule) are all of the assets required to conduct the Business
• Contracts - Seller has listed and disclosed all material contracts (which are current and signed)
• Tax Matters - All local, state and federal taxes have been identified, disclosed and paid
• Applicable Laws & Permits - All local, state and federal permits have been identified, applied for and are current
• Environmental Matters - All local, state and federal environmental licenses and permits have been identified, applied for and are current
• Employment Matters - all present employees and independent contractors have valid current employment contracts and any sick, accrued vacation leave or personal leave has been identified and properly recorded
• Employee Benefit Plans - Each Employee Benefit Plan that is currently in effect has been disclosed and properly recorded and recognised from a liability perspective
• Intellectual Property - A list of all IP has been disclosed and checked, including the Business' name, trade names, registered and unregistered trademarks, service marks, service names, and applications; All patents, patent applications, and inventions and discoveries that may be patentable; all registered and unregistered copyrights; all know-how, trade secrets, confidential or proprietary information, customer lists, Software, technical information, data and process technology (phew!)
• Solvency - The Seller is solvent and can financiallly survive the costs of completing the sale
• Brokers - If there are any brokers involved in the deal they are disclosed and the terms & conditions of the broking agreement are disclosed
• Insurance - All appropriate insurance cover is documented and is current
• Disclosure - and if the above wasn't bad enough there is a catch all clause which says that if you fail to disclose any material detail affecting the deal then the deal is off AND you are liable for any costs incurred by the acquirer for consummating the transaction

The lesson here is that the deal is not done until the contract has been negotiated, the agreement consummated and all Reps & Warranties have been submitted, checked and approved by the acquirer.

To ease the burden of pulling this all together at the last minute it pays to have on-going rigour in your day-to-day business activities.