Valuing the Intangible — Pricing Lumengrid Before the IPO

A four-round, advanced equity-research valuation simulation set on the sell-side desk of Aurial Securities, a Paris-based independent research and advisory house. Your team has six trading days to publish a valuation and a buy/hold/sell call on Lumengrid SAS — a French B2B AI energy-optimisation software company (EUR 132M revenue, +38% YoY, 81% gross margin, a EUR 9M operating loss) that has just filed to list on Euronext Paris in an indicative EUR 22–28 range (EUR 1.4–1.9bn equity value, 18–24x forward revenue). The valuation problem is that almost none of Lumengrid's worth sits on its balance sheet: only EUR 6M of net tangible assets stand against a ~EUR 1.6bn valuation, while the real value lives in intangibles the accounts barely capture — proprietary algorithms and data, a 1,900-customer base with 124% net revenue retention, brand and switching costs, and EUR 71M of cumulatively expensed R&D. Round 1 frames the problem and chooses a weighted valuation toolkit (DCF, revenue/gross-profit multiples, sum-of-the-parts, a real-options lens), rejecting the book-value/no-earnings trap. Round 2 puts a defensible value on the intangibles — building customer-lifetime-value from cohort economics, treating R&D as investment with an economic rationale, and explicitly avoiding double-counting value already embedded in revenue multiples. Round 3 sets the base-case DCF assumptions (revenue fade, year of profitability, terminal margin, WACC, terminal growth), runs a bear/base/bull sensitivity table, names the single key-risk assumption, and places a central equity estimate relative to the IPO range. Round 4 lands the curveballs — a rival AI energy platform pressuring growth durability, a sponsor banker hinting that a 'constructive' note would be appreciated, and a large customer (8% of revenue) reviewing its contract — and forces a published rating, price target and 12-month horizon defended to the investment committee under MiFID II independence pressure. The scoring rewards the concept's correct moves (intangible-aware triangulation, anti-double-counting discipline, a defended range with a named key assumption, and protected independence) and measurably punishes the five classic errors: book-value anchoring, single-point single-method valuation, double-counting intangibles, mechanical R&D adjustment, and a softened rating under banking pressure. Final KPIs track Valuation Quality, Assumption Robustness, Recommendation Credibility and the team's central equity estimate (EUR bn) versus the EUR 1.4–1.9bn range.