Valuations are quantitative by nature. They are heavily reliant on numerical inputs; valuations improve with additional financial information. This is why start-ups can be difficult to value during certain stages of development. Somewhere between seed funding and the emergence of sustainable financial performance, most start-ups encounter a period when there are few reliable numbers to
Sometimes valuing private companies seems like looking for the light switch in a darkened room. We wave our arms and legs around (read: run complex financial models), but still don’t know if we’re really any closer to the switch (read: accurate valuation estimates). But what if someone would tell us whether to go right or
The Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) have consistently emphasized the importance of accurate business combination accounting. We studied the accounting purchase price allocation results with the focus on goodwill and identifiable intangible assets for Software and Services companies. While no two acquisitions are the same, purchase price allocations
Vinod Khosla, a prominent Silicon Valley venture capitalist, once said: “I am only interested in technologies that have a 90 percent chance of failure.” The success of technology-based companies such as Google, Genentech, or Sun Microsystems leads many observers to believe that Vinod’s strategy has worked so far. While focusing on outliers in forecasting investment
Common sense tells us that most acquirers pay less or more, but rarely exact Fair Value for the companies they acquire. Because M&A transactions are complex, it is hard to imagine that pure economics is the only factor that influences deal pricing. Any difference between the purchase price and the Fair Value of the acquisition must be
Contrary to most reports, Facebook did not pay $1 Billion for Instagram. In fact, the acquisition was completed for $521 million, according to the company’s SEC filing. That document tells us that Instagram’s mostly intangible value was partly comprised of acquired technology and their trade name. $433 million of goodwill in the purchase price was
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