Deutsche Bank Interview Question

What makes it more difficult to value a technology company? Which method of valuation would you use?

Investment Banking: Technology: Round 1

1 answers

1
votes

It can be more difficult to value a technology company because some of them do not have earnings or have negative earnings. For instance Twitter is valued at multiple billions of dollars but has no incoming cash flow. Twitter has the potential platform and following to make money in the future, but currently it has negative earnings. This can make a company difficult to value. Comparables could be helpful here, in looking at what previous deals for comparable companies have valued them at.

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