Coming up with a single estimate is futile – it would almost certainly be wrong. It’s much more useful to get an idea of the range of possible outcomes with 3 scenarios.
1. The base scenario: based on how your company is doing today
Nothing wild happens here – it should be slightly optimistic. If it came true, you’d be pleased but not surprised.
Think about things like: Would it have 200 employees, or nearer 1000? How many countries would it be in? How popular might the product be? You don’t need to answer these precisely, just have an intuitive idea of the level of success.
Got it? Now write down what exit value you feel your company might achieve.
2. The dream scenario: if everything went better than expected
It’s the scenario you told yourself not to lean on too much when you were considering the job – the stuff you and your colleagues fantasized about over Friday drinks, only semi-jokingly.
That competitor you’re bothering with? Your company ended up winning the battle. That second product you’re thinking about launching? It became a revenue-making thing. Your reputation grew, which made hiring easier. Or a big investment round helped you expand internationally. These dream scenarios will differ from company to company, but think about what it would look like for yours.
Again, forecast the exit value and write it down.
3. The disappointing scenario: if everything went a little worse than expected
This one is slightly pessimistic – not full-on bankruptcy, but not nice either. Think of the key hurdles still ahead for your company. Not sure how to make your product profitable yet? Will you need to raise more money soon? Is your ambition to expand internationally?
Now think what would happen if you didn’t overcome the majority of these hurdles. Estimate once more.
Using your 3 numbers, you can move from company exit values to estimating your personal payout in each scenario. Figure out what your stake in the company is, multiply it by the exit values, and there you have it.