You are writing an internal investment committee memo for a long/short equity fund.
Company (fictional): LedgerLift (ticker: LLLT) – B2B spend management + AP automation SaaS for mid-market enterprises.
Use only the information below. Do NOT browse the web. This is a fictional exercise, not investment advice.
DATA
- Current share price: $46
- Shares outstanding (basic): 190m
- Net cash: $1.4B
- FY2023 revenue: $560m
- FY2024 revenue: $680m
- FY2025 revenue: $820m
- FY2025 gross margin: 78%
- FY2025 operating margin: 18%
- Revenue mix: 92% subscription, 8% services (services GM ~25%, subscription GM ~82%)
- Customer KPIs: 6,200 customers; ARPA ~$132k; logo churn 6%/yr; gross retention 94%; NRR 123%
- CAC payback: 18 months; S&M as % of revenue: 34% in FY2025
- Concentration: top 10 customers = 16% of revenue; top 1 = 3%
- D&A: 2.5% of revenue
- Capex: 3.0% of revenue
- Net working capital investment: 1.0% of incremental revenue
- Cash tax rate: 23%
VALUATION ASSUMPTIONS (build 2026-2030 forecasts)
Base case:
- Revenue growth: 21%, 18%, 15%, 13%, 12%
- Gross margin: 79%, 80%, 80%, 81%, 81%
- Operating margin: 20%, 22%, 24%, 25%, 26%
- WACC: 10%, terminal growth: 3%
Bull case:
- Revenue growth: 25%, 21%, 18%, 15%, 13%
- Gross margin: 80%, 81%, 82%, 82%, 83%
- Operating margin: 21%, 24%, 26%, 28%, 29%
- WACC: 9%, terminal growth: 4%
Bear case:
- Revenue growth: 16%, 13%, 11%, 10%, 9%
- Gross margin: 78%, 78%, 79%, 79%, 80%
- Operating margin: 17%, 18%, 19%, 20%, 21%
- WACC: 12%, terminal growth: 2%
COMPS (fictional peer set)
- Peer A: EV/NTM Revenue 9.0x, EV/NTM EBIT 35x
- Peer B: EV/NTM Revenue 7.0x, EV/NTM EBIT 28x
- Peer C: EV/NTM Revenue 11.0x, EV/NTM EBIT 42x
Use the median multiple as your comps anchor, but explain adjustments.
TASK
Write a pro-level IC memo with:
1) Recommendation (Long/Short/Pass) + 12-month PT range + 2-sentence thesis
2) Business + why it wins / why now
3) KPI quality check (NRR, churn, CAC payback, concentration) and what could be wrong
4) Base/Bull/Bear model: show a compact table for 2026-2030 revenue, EBIT, and unlevered FCF; compute DCF EV, equity value, and implied value per share for each scenario (show key steps, not every line)
5) Comps cross-check: implied EV and per-share range using median multiples
6) Catalysts (3), Risks (5), and "what would change my mind" (3 falsifiable triggers)
7) 10 diligence questions for management
Keep the memo under ~1,200 words, excluding tables.
Advanced Investment Memo (IC Memo)