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Science, Art or Sorcery?
Figure 1: Discounted Cash Flow
- Apply Reasonable value multiple (e.g., 25x P/E, 12x EBITDA) to 2004 results
- "Discount" the future value to the present at 30%-40% annual rate
Example: Company worth $100 Million in 2004 is worth $27 million today.
| Figure 2: Portal Revenue And Unique Visitor Transaction Multiples |
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| Entity | Enterprise Value ($millions) | Revenues ($millions) | Unique Monthly (millions) | Enterprise Value Revenue Multiple | Enterprise Value Unique Monthly Visiter Multiple |
| Alexa Internet | 250.0 | 0.4 | 0.7 | 625.0 x | 344.4 x |
| HeadHunter.NET | 150.0 | 1.1 | 0.8 | 136.4 x | 199.4 x |
| Salon Internet | 120.6 | 1.2 | 1.2 | 104.3 x | 100.5 x |
| Talk City | 253.5 | 1.5 | 2.3 | 174.5 x | 112.2 x |
| Big Charts | 166.0 | 2.1 | 1.6 | 79.0 x | 103.8 x |
| Internet.com | 434.5 | 3.5 | 1.7 | 124.1 x | 252.8 x |
| HotJobs.com | 514.2 | 3.5 | 1.2 | 146.4 x | 427.8 x |
| Go2Net | 555.6 | 4.8 | 3.3 | 115.7 x | 169.1 x |
| Launch Media | 322.9 | 5.0 | 0.9 | 64.4 x | 353.6 x |
| © Bond & Pecaro 1999. All rights reserved. http://www.CyberValuation.com | |||||
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Figure
3: |
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| (Through Third Quarter 1999) | ||||
| Range of Valuation Multiples | ISPs | Portals | Internet Retailers | B2B |
| Range of Weighted Average Revenue Multiples | 10 to 14x | 84 to 88x | 28 to 49x | 25 to 36x |
| Range of Weighted Average Revenue Multiples For IPOs | 32 to 36x | 100 to 110x | 56 to 75x | 43 to 52x |
| Range of Weighted Average Revenue Multiples For M&A Transactions | 4 to 5x | 49 to 67x | 16 to 20x | 7 to 9x |
| Range of Weighted Average Subscriber and Monthly Unique Visitor Multiples | $1,308 to $1,935 per subscriber | $385 to $397 per subscriber | N/A | N/A |
| © Bond & Pecaro 1999. All rights reserved. http://www.CyberValuation.com | ||||
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