How Do You Value a Web 2.0 Business?
A reader in India has sent me a question all around business valuation and more specifically he asked, how do you value a Web 2.0 business.
At the REA Group we purchased 15 different businesses and during that time used a number of different valuation approaches. These approaches included market values (ie comparative sales), discounted cash flow, revenue multiples, net earnings and EBITDA multiples, and value per customer.
The objective in the valuation of a business is to work out the value in the hands of the current owners and then the value in the hands of the acquirer. This give you the overall range and the negotiation objective is to agree a price as close as possible to the value in the sellers hands. (Otherwise you are giving away too much value to the seller)
However, valuing a web 2.0 business is a different kettle of fish.
Recent Comments