Determination of Valuation

• Project earnings in Stable Growth Phase, say EN, for N years from now

• Obtain a reasonable projected P/E for industry segment

• Use a reasonable IRR value (based on risk):

  • i = 50 to 70% for early stage
  • i = 30 to 50% for second round
  • i = 15 to 30% for pre – IPO

• Valuation now = (EN * PE Ratio) / ( 1 + i )N

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