An Overly High Valuation Can Scare Away Investors or Spark a Down Round that Dilutes an Earlier Angel Investment Mark Boslet at PE Hub explains that with IPOs on track to have their biggest year since 2010 and some major technology disruptions sparking infectious excitement, it’s important to keep in mind key fundamentals including not accepting too high a valuation for your business or investment properties. Here’s why:
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Increased Transparency, More Automation, and More Access to Capital Rod Ebrahimi, a columnist for the Entrepreneurs section of Forbes, writes that “Thousands of miles away from Wall Street, some David-sized companies in Silicon Valley are cultivating new trends that will change people’s relationship with money.”
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MidasFund Will Not Acquire Distressed Companies; However, it Will Buy Stable Divisions of Bankrupt Companies. Here’s Why. “Last week’s announcement that MidasFund had started acquiring zombie companies caused a flurry of emails,” writes Rob Slee on the MidasMoments blog of the MidasNation site. “Many of you asked about the differences between acquiring distressed, zombie and healthy companies. Let’s dig into this.” Here’s an excerpt:
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Investopedia weighs in on the pros and cons of varying approaches: Business valuation is never straightforward – for any company. For startups with little or no revenue or profits and less-than-certain futures, the job of assigning a valuation is particularly tricky. For mature, publicly listed businesses with steady revenues and earnings, normally it’s a matter of valuing them as a multiple of their earnings before interest, taxes, depreciation and amortization (EBITDA), or based on other industry specific multiples. But it’s a lot harder to value a new venture that’s not publicly-listed and may be years away from sales. TUTORIAL: Valuing Employee Stock Options…
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The Wall Street Journal’s Small Business Blog featured recently a guest column by Antone Johnson on the use, misuse, and misvaluation of intellectual property. It’s probably of interest to valuators and financial consultants who are working with small business owners to value and growth their businesses. Venture capitalists, angel investors and start-up lawyers these days tend to be obsessed with “intellectual property,” or IP. And for good reason: In the information economy, the core assets of a new venture are likely to be talented people, the IP they create, and little else. To maximize future value, founders should…