Valuation

Valuation

Valuing technology companies by historical and projected financial performance requires different methods. Selecting the best method for your company depends on its stage of growth, profitability and many other factors. One size does not fit all. Further, there are many non-financial factors that can be used in very early tech company valuations. These factors can be used even before they generate revenue. Valuing pre-revenue tech companies is expl...

Valuation

Who Buys Technology Companies and When? Unless you plan to build a company over several decades, you should plan how your company will eventually exit. If you are not planning to take your company public, then you need to look for another company that will acquire you. There are many types of acquirers for technology companies: companies of all sizes (not just the big ones); private equity (PE) and similar funds; fa...

Valuation

When an exit is on the horizon, tech entrepreneurs need to come up with a way to value their company. Software as a Service (SaaS) companies are almost always valued using a Revenue Multiple. This is described in the companion article: Methods for Valuing Technology Companies. SaaS company valuation starts with the current average multiple for SaaS public companies and then adjusts the multiple up or down depending upon a myriad of factors.  Howev...

Valuation

Valuing a tech company today has to be done much differently than five or ten years ago. In the old days (like 5 or 10 years ago) tech companies were more often valued using old economy methods. These were usually multiples of key financial metrics like profit, revenue and growth rate. This article was written by our Emeritus Founder almost a decade ago. It's a good description of how tech company v...