January 3, 2007 • 6:02 am
Valuation for early stage investments tend to look like horse trading because traditional valuation tools, i.e. P/E ratios make no sense when a company is losing money. Because we invest into pre-profit (and in many cases pre-revenue), we tend to use a price to sales ratio for valuation. For companies that aren’t generating revenue, we can work backwards and discount forecast revenues.
What basis would you use for determining an appropriate multiple?
Icon Corporate Finance have published their 2006 figures for Technology M&A. Their numbers are a good place to start that discussion based on achieved exit prices. You can see on the left hand axis that price to sales multiples tend to fluctuate between 1.5x and 2.0x for 2006:
Filed under: Mergers and Acquisitions, Venture Capital
January 2, 2007 • 3:24 pm
CK has posted a photo journal of Christmas in Jackson which features me, my wife, my daughter, sushi, an unhappy Santa and CK’s family. It was great getting to see friends I haven’t seen in ages again. And we had nice weather to boot…
I’m still waiting to see Part 2 of the series.
Filed under: Other
January 2, 2007 • 3:15 pm
Last night was the flight back to London from the US. The (unlucky) lady sitting beside me was also and expat and was making plans to visit Barcelona, so since I lived there for 6 years I gave her a few highlights of things to do and see in Barcelona:
Take the "Bus Turistic", it costs about 15 Euros and takes you straight to the things you want to see. You get about 2 Euros off at each museum/site so you amortize the 15 Euros pretty quickly…
Top things to see:
Top places to eat:
Hostal de la rita
The picture to the right is from Valencia- I also recommended that she make a point of visiting Valencia during Las Fallas this year. Seeing (or hearing rather) a mascleta in person is absolutely spectacular. There are a few other cool pics of las fallas here as well…
Filed under: Other