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darkmagician383's picture

Question on valuation of a video compression company

by darkmagician383 (Chimp, 7 Banana Points Points) on 10/10/08 at 12:04pm

I am working on valuing a private video-compression technology company, and wanted to know if the companies in this area are valued based on their revenues or more based on EBITDA? In other words would a buyer place more value on the revenues or on the ebitda?
Most of the smaller similar sized comps have negative earnings.

Thanks for any insight that the experienced folks on WSO can provide.

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arcanne's picture

Sounds like a venture or

by arcanne (Orangutan, 315 Banana Points Points) on 10/10/08 at 12:23pm

Sounds like a venture or early stage company. Correct?

darkmagician383's picture

No

by darkmagician383 (Chimp, 7 Banana Points Points) on 10/10/08 at 12:53pm

No, it is not a start-up. The revenue growth YOY has been over 50%, but the company has had losses since 2005YE. EBITDA has been negative for the subject and public comps of similar size as well.
In doing a market multiple approach I am faced with the issue on what type of multiple would be suitable for a company in the video compression technology area.