Title: Valuation of start-up internet companies
Authors: Thomas Hering, Michael Olbrich, Martin Steinrucke
Addresses: Chair of Business Administration, Fern-Universitat Hagen, Universitatsstrabe 11, D-58084 Hagen, Germany. ' Chair of Business Administration, Fern-Universitat Hagen, Universitatsstrabe 11, D-58084 Hagen, Germany. ' Department of Production Management, Fern-Universitat Hagen, Universitatsstrabe 41, D-58084 Hagen, Germany
Abstract: The valuation of start-up companies is of importance both in venture financing as well as when a company is sold or goes public. This paper details the procedure to determine the value of a company in e-business. It first investigates which models must be applied, before proceeding to work out how the company|s payment surpluses on which the valuation is based should be estimated. This article makes it clear that it is less the choice of the valuation model and much more the surplus forecast that constitutes the real challenge in valuing start-up internet companies.
Keywords: company valuation; decision value; discounted cash flow method; due diligence; e-business; electronic business; future earnings method; internet start-ups; new ventures; multiples; real options; state marginal price model; e-entrepreneurship; electronic entrepreneurship; surplus forecast; economic success factors.
International Journal of Technology Management, 2006 Vol.33 No.4, pp.406 - 419
Published online: 13 Mar 2006 *Full-text access for editors Access for subscribers Purchase this article Comment on this article