| New and emerging investment targets could be found in VC's investment in internet business. Those investment opportunities are typical internet-type in that they have a fast-growing user population and very optimistic future earning expectations. However they are still in start-up stage, don't have definite business models, haven't make any money, and more importantly can't find any similar or comparable entities in listingcompanies. W Internet Community is one typical case.Generally common valuations include cost analysis, earning analysis and marketcomparison. DDM, FCF, and EVA can be used in earning analysis. However there is no proper valuation models that can applied to investments such as W Internet Community. People have talked about the vast difference of valuations of Facebook and MySpace which had invited strategic investments. This paper, from an investment management's point of view, tries to quantify the strategic value, the business model, the team, and the risks, and price the whole project.This paper starts from S company, which may be the potential buyer of W and analyzes S's position in the online game industry, the competitions, S' strategic plan. Then the paper discusses S' strategic needs from W' and its users. And it analyzes W's users' age, geographical distribution, activity degree and loyalty. This paper talks about W's position in the industry, business model, and its team. Finally this paper uses Market value/Operating Income Model to derive W's fundamental financial value, and gives out a price after considering the risk factors. A tentative investment plan is also included. |
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