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December 05, 2006
What's Your Social Media Biz Worth?
Over on the Equity Kicker blog we've been discussing social media sites and where to learn more about how the successful ones made a business out of it. One of many several sources is Startup Review, a blog sponsored by Sierra Ventures, a US venture firm.
The blog publishes case studies on web companies that meet its criteria for success. The profiles are quite detailed and describe what the service is on offer, how the businesses acquire new customers, generate leads, and earn money. The author also gives his take on how valuations are calculated.
One thing we noted is that the valuation estimates based on sales multiples in the US market look quite rich compared to European tech sector norms. Price to-earnings-ratio is also higher than the European norm for M&A deals, but not as far off as the PS ratio is, as the data from Regent Associates suggests below. It should be noted that Regent tracks tech sector deals in its database, not just Internet-related deals. Its data can include consulting companies and service-heavy IT companies. Its latest figures reflect first half 2006.
Current price to earnings ratio is 17.8 (price paid includes 50% of the expected contingent consideration in deals with earn-outs and apply to historic performance, trailing year's financial figures.)
If any readers have current data based on public and private European online company valuations at exit or last round, we'd be interested in it.
Read - Startup Review Case Study Index
Read - Regent Associates 1H06 Review (regent associates)
Posted on December 5, 2006 08:13 AM | Posted to entrepreneurship | Permalink
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