Valuation and pre-fundraising restructuring for an education company

Background

The client is a network of English-language and life-skills centres for children, run by two founders and grown to 14 sites in Ho Chi Minh City and Da Nang. Because different shareholders had funded each phase of expansion, the network operated through four separate legal entities with uneven ownership percentages. When they began talking to investment funds, the founders realised they had no consolidated financial picture and no clear view of what valuation to propose.

Challenges

• The four entities applied different accounting policies, particularly for tuition fees received in advance.
• Shared costs such as curriculum, marketing and management staff were booked in one entity, distorting the profit of each centre.
• Minority shareholders in each entity had to be treated fairly when swapping into shares of the holding company.
• Investors required a five-year financial model with verifiable assumptions.

Our approach

• Weeks 1–3 — diagnosis: reviewed three years of data for all four entities and agreed a single policy recognising tuition revenue over the actual term.
• Weeks 4–6 — consolidated reporting: reallocated shared costs by student numbers and floor area, and prepared consolidated financial statements and centre-level P&L reports.
• Weeks 5–9 — ownership structure: designed a holding company owning 100% of the entities, set swap ratios based on each entity's value contribution, and worked with lawyers on documentation and the resulting tax obligations.
• Weeks 10–13 — valuation: a discounted cash flow model benchmarked against regional education transactions, with sensitivity analysis on class fill rates and the pace of new centre openings.
• Weeks 14–15 — fundraising package: an investment summary, a data room and a set of anticipated investor questions and answers.

Results

The first consolidated financial statements were completed in six weeks. The share swap proposal was approved by 100% of shareholders across the four entities. Cost reallocation revealed that three centres had much lower margins than estimated, prompting management to revise its expansion plan. The fundraising package was ready after 15 weeks, with valuation presented as a range supported by explicit assumptions so the founders could negotiate with confidence.

“A valuation is persuasive when every assumption can be traced back to source data. Investors will ask, and founders need to answer without having to call us.” — Mr Dinh Quang Vinh, Partner, Transactions & M&A, Corvane Advisory

Lessons learned

Smaller businesses often grow through a patchwork of entities; consolidating them into a clear structure should happen before fundraising, not during negotiations. Tuition revenue recognition has a large effect on reported profit and should be standardised early. Valuation is best presented as a range with sensitivity analysis rather than a single number.