Valuation:%20What%20Is%20My%20Company%20Really%20Worth?

1
Valuation What Is My Company Really Worth?

Satellite Broadcast - January 18, 2001
2
Valuation Whats My Company Really Worth?

• Marcia Hooper, Advent International
• John Jarve, Menlo Ventures
• Alex Laats, Informio Inc.
• T.L. Stebbins, Adams Harkness Hill
• Moderator Joe Hadzima, Main Street Partners

3
VALUATION

• Whats My Company Really Worth?
• ANSWER

At Any Given Time Your Company Is Worth What
Someone Will Pay For It At That Time
4
WHAT DETERMINES WHAT SOMEONE WILL PAY?

• SUPPLY
• DEMAND
• WHEN
• MARKET LIQUIDITY
• METRICS FOR VALUATION

5
VALUATION - Macro Drivers

• Which Way Is The Tide Going?
• A Rising Tide Lifts All Boats
• But, A Falling Tide Strands Them

• Overall State of the Economy
• e.g. Purchasing Cycles Will Customers Purchase
  Today?

• Condition of Public Equity Markets
• Time to IPO
• Acquisition Paid by High P/E Stock

6
VALUATION - Macro Drivers

• Funding Cycles of Venture Capital Investors
• Allocation of Funds By Pension Funds and
  Institutions
• How Do They Determine How Much To Allocate To
  Alternative Investments Such as Venture Capital?

• How Much Venture Capital Is Available Today?

7
Money Continues to Flow Into Venture Capital
Funds
New Into Funds (in Billions)
Average Per Fund (in Millions)
8
VALUATION - Macro Drivers

• Funding Cycles of Venture Capital Investors
• How Much Venture Capital Is Available?

• What Sectors Is It Invested In?
• Anything.Com last year at this time
• Optical Networking or Genomics today?

• What Stage of Business Is It Invested In?
• e.g. during the LBO craze, early stage venture
  capital was scarce

9
Venture Capital Investment Returns
Seed Stage Returns Are Up Substantially
Source Venture Economics Jan 2000
10
VALUATION - Macro Drivers
Capital
11
VALUATION - MICRO Drivers

• For Any Given
• Macro Environment
• Given Sector
• Given Stage of Business
• What Determines Valuation?

• A Variety of Factors, including ...
• The TEAM and Experience
• The Business Model and Its Sustainability
• Evidence of a Business- Will the Dog Eat The
  Dogfood?
• Momentum or Lack Thereof

12
VALUATION - POSITIONING NEGOTIATION?

• How Much of Valuation Is Simply
• Positioning?
• You Are Known By The Company You Keep
• Customers, Partners, Advisors

• The Train Is Leaving The Station

• Negotiation Skill?
• Having or Appearing to Have Alternatives
• Getting A Bidding War Going?

13
Whats Your Company Really Worth?

• SUMMARY OF VALUATION DRIVERS
• Macro Conditions and Trends
• The Economy
• The Public Equity Markets
• Funding Cycles and Relative Returns
• Company Specific Factors
• The Valuation Story
• Positioning and Negotiating Skills?