Valuation Of Internet Company

The Internet company is a new kind of company relying on the internet to finish transactions, its main feature are the rapid growth and huge development potential. With the development of Internet companies, the internal expansion has not been unable to meet the needs of rapid growth, so growing number of external acquisitions appear in the market.In this condition, how to access the value of Internet companies becomes a hot-spot in practice.The traditional assessment methods of assessing the value of Internet companies have some limitations:Market method requires at least one contrast case, but because the internet companies are high-risk companies, every company has its own operating style and different level of risk, so a contrast case is very different to find, the market act is not match; the cost method most used to evaluate the companies with rich physical assets, such as manufacturers, etc., So it’s not match for the asset-light companies-Internet companies as well; the traditional DCF method requires companies to have a stable cash flow and assuming operating policies remain the same as before, so it’s not suitable for internet companies, too. The traditional business valuation methods such as the cost method, DCF approach and market approach can not reflect the characteristics of the Internet companies, so searching new theories and methods of assessment has become a hot issue in assessment practices.Based on studying the value creation process found that the business of Internet, we find that business model is the value source of internet companies, thus assessing the value of Internet companies from the business model perspective. Through contrast, we find the evaluation criteria of economic value added (EVA) is more suitable for the internet company, so finally using EVA model to assess the value of Internet companies. But EVA cannot reflect the impact of business model to its value, so introducing the business model to modify EVA model. When calculating the adjust coefficient, we use AHP to evaluate the weight of each factor in the business model, the obtaining of the final adjustment coefficient through fuzzy comprehensive evaluation method.In the empirical analysis, selecting the Internet company-Focus Technology Co., Ltd. as the evaluation object, the company’s products and business models are analyzed using the frame established before in this paper. Then using EVA modified model to assess its value. As can be seen from the results, the assessed value with the introduced EVA modified model is closer to its real value in the market, and fully reflects the trend of future changes of the value, which all verify that EVA modified model we proposed assessing the value of Internet companies is scientific, thus it can offer a feasible theory and method to assess other Internet companies.