ValuationModelApplication-InternetCompanyValuation参考.ppt

The market uses a range of valuation techniques, both bottom-up and top-down. Bottom-up estimation tools Discounted cash flow Real options Comparative ratio analysis Price/addressable market (e.g., customers) Price/sales or price/revenue Price/earnings Top-down estimation tools Customer lifetime value Each technique brings inherent strengths and weaknesses which are biased toward certain situations. Appendix: Internet company valuation techniques The following approaches illustrate the different valuations of E*Trade. Bottom-up estimation tools Discounted cash flow Real options Comparative ratio analysis Price/addressable market (e.g., customers) Price/sales or price/revenue Price/earnings Top-down estimation tools Customer lifetime value The traditional discounted cash flow (DCF) valuation relies on reasonably accurate forecasts. We can use the example of E*Trade to illustrate how a DCF works. The discounted cash flow comprises of discounting the free cash flow (FCF) in high growth years and calculating a terminal value (TV) based on a lower constant growth rate for subsequent years. The real options valuation model is relatively new and used to incorporate the benefit and uncertainty of future business opportunities into the overall valuation. E*Trade’s valuation is particularly high using this technique due to its volatile estimated future cash flows. The market value / addressable market multiple estimates market value in comparison with a similar company. We can compare E*Trade with TD Waterhouse to illustrate this valuation technique. The Market value / sales (revenues) ratios are the most widely used valuation tool for eCommerce and Internet opportunities because the data is usually available and reasonably accurate. We can compare E*Trade with TD Waterhouse to illustrate this valuation technique. The price / earnings ratio is the most widely accepted tool for valuing companies, however the difficulty with most eCommerce ventures is that they do not gener