Great expectations: Finding the value of startups
Abstract: It’s difficult to value a startup business when it has no track record and has never generated positive cash flow — or even revenues. Without history to lead the way, startups often derive value from exceptional growth expectations. This article explains that valuators know how to spot the clues, including management style, business type, market size, potential growth opportunities and development stage, which can help them more accurately estimate future performance. A brief sidebar explains that employee stock options (ESOs) can be an effective way for startup companies to attract and retain key employees.