What a start-up is worth depends on why the prospective buyer wants it, but the prices still sometimes seem random or even nonsensical.
Three possible calculations were used to determine a valuation.
The first requires exploring how much time and effort it would take to build the product from scratch and attract new users.
The second is potential cash flow.
The third is “in the realm of, ‘What number do we need to put on the table to convince the management and investors to part with their dream?’ ” he said. “Often, they end up somewhere in the magic middle.”
With all these Informations kept in mind, the $1 billion Facebook paid for Instagram still seems to be too high.
Also, I think that for an acqui-hire you have to add the value of killing the idea or dream of the founder.
Something different: I have to say that I really like the posts by Nick Bilton. He’s able to write short and concisely and highly informative articles.