The appeal is that one is looking at actual transactions where real buyers and

The appeal is that one is looking at actual

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4.The most recent VC post-money valuation Technology companies are typically funded by venture capitalists (VCs). VCs typically stage their cash investments into the firm over time so as to limit their risk and focus the firm’s management on working hard to hit the next milestone(s) so they can get the next round of financing. The prototypical sequence of financing rounds is Seed, Series A, Series B, Series C-D, then acquisition or IPO. At each round, the VCs who are already invested in the firm identify (= guesstimate!) how much the firm’s equity is worth before the financing dollars that are needed. 5.Meet or beat another bidder’s priceBy Feb. 2014 there were stories around that Google had made an unsuccessful offer of about $10 billion for WAPP. However “Google did not bid for WAPP, the company revealed yesterday. Suggestions that Facebook’s $19bnpurchase of the instant messaging service outbid a $10 billion offer from Google are “simply untrue,” the company’s Senior Vice President Sundar Pichai said. Mr Pichai, speaking at the Mobile World Congress in Barcelona, praised WAPP’s achievements, and said the company had talked to them in the past about working more closely together. “WAPP was definitely an exciting product,” he said. “We never made an offer to acquire them. Press reports to the contrary are simply untrue.”(Daily Telegraph, 2/26/14). But regardless of whether Google technically did or did not offer to buy WAPP, the mere fact that Google was clearly sniffing around would mean that another bidder would have to pay at least that price (rumored at the time to be $10 billion). Here are some valuation methods that are not likely to be (as, if at all) useful are: Discounted future dividends. For many reasons, not the least of which is that WAPP was not paying dividends at the time nor could likely do so for many years. Price-to-revenue, price-to-book value, and P/E multiples (because WAPP’s revenue and book value were very small, and its earnings were negative). Does either method require in-depth use or analysis of financial statements? Briefly explain your answer. (1 pt)
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