Comments on: Must be nice to turn down $1 billion

By: Matt

Matt — Fri, 10 Nov 2006 07:20:33 +0000

Ultimately, in a business buyout, failure is often more about problems with the structure of the deal and other fine-print items than with the big headline sum. Without seeing the terms and being familiar with Facebook’s operations, I couldn’t say whether it’s a bad decision or not…I defer to their board and executive team as more knowledgeable about the facts than me.

A few companies are indeed being bought out for more than they appear to be worth on paper. But I don’t think the Facebook deal would have been one of those. Facebook is in the black. They don’t _need_ to get bought, because they’re not facing an imminent cash crisis like so many late-stage dotcoms were.

I can easily imagine a combination of business structure and deal structure where, if offered $1B for my business, I’d pass. Of course, I don’t have a business anyone would pay $1B for, but I do have a profitable and growing enterprise, and I do know how counterintuitive some of those valuation decisions can be…and how tricky the fine print can be in the deals.

By: Paige

Paige — Mon, 06 Nov 2006 22:18:59 +0000

Facebook is worth the money because it’s an extremely personal database of the likes and dislikes of young, rich, and educated North America. If a company wants unlimted access to this demographic (and they do, and they will) Zuckerberg will get the $2bil he’s holding out for…

By: Dimes

Dimes — Fri, 03 Nov 2006 22:52:50 +0000

Facebook isn’t worth one billion dollars, sorry. Those guys who are holding out will probably end up with nothing (and really, will anyone be worse off?).

By: mbhunter

mbhunter — Wed, 01 Nov 2006 06:25:51 +0000

Good points.

It would be dumb to sell Google for $1B. A P/E of 20 (which would be what Facebook’s valution would be at $1B) is not extravagant, but it’s not Buffett cheap either.

By: Lazy Man And Money

Lazy Man And Money — Mon, 30 Oct 2006 03:14:58 +0000

Well if you use YouTube as the measuring stick, I think that Facebook is worth about 3B. My rationale here is that YouTube never really figured out a way to monetize their traffic. Facebook on the other hand, has something like 95% of every high school and college student in the US. It’s pretty easy to come up with ads to target there. It can be much more targettable than MySpace, where anyone of any age has an account.

I don’t know how Alexa factors in the time spent there, but it’s literally hours a day for the school kids.

According to their wikipedia entry they bring in about 1M a week or $50M a year (we’ll just round down). I think that would make very profittable meaning that they don’t need to sell like many of the companies in Web 1.0. If there weren’t profitable it would be really ridiculous, but as long as they making money and growing, maybe it’s worthwhile to roll the dice.

Here’s a parting thought… What if you put a billion dollars in the hand for a 100% share in Google? Given their market cap and cash on hand, they would chuckle.

By: Flexo

Flexo — Sun, 29 Oct 2006 15:26:03 +0000

I don’t think I’ve ever visited Facebook.com, but I can’t imagine that whatever they have there is worth $1B. I think we’re seeing some serious overvaluation at the moment in the market in general… I would have taken the money and ran. They’re some greedy mo-fos.

On the other hand, if they really think their business is worth that much or more, they should be getting the best advice in the world before making these decisions, so a number of people must agree that the business is worth that much or more.