Market Multiples Modeling for Electronic-commerce Companies

<p>This paper is dedicated to market multiple modelling for electronic-commerce companies. The reason for conducting this research was the absence of strong multiples able to predict the value of electronic-commerce companies. The aim of this paper was to create special market multiples for electronic-commerce industry. Due to this several objectives were determined:</p><p>1)To analyze and overview relevant literature resources</p><p>2)To explore the characteristics of electronic-commerce companies and splitting industry into groups</p><p>3)To investigate the trend on M&amp;A e-commerce events</p><p>4)To create a sample and splitting it up into subsamples</p><p>5)To model a unique multiple for each group</p><p>6)To test the multiples for validity</p><p>The paper consists of three parts:</p><p>1. The first section contains literature analysis and overview of relevant sources</p><p>2. Section 2 contains the analysis of electronic commerce industry from the point of key characteristics. This have been done to justify the importance of usage special market multiples for this industry. Additionaly, the second part of this section is dedicated to the most actual and interesting cases of M&amp;A deals on e-commerce market.</p><p>3. Section 3 is dedicated to the empirical part of this study. Here could be found the methodology of creating the sample and obtaining of the results. The second paragraph provides the information about the process of market multiples modelling with its further testing for validity. Verification comes through the comparison of tree values: obtained from traditional multiples, obtained from newly created and the real one.</p><p>To perform the study was gathered the sample splitted into two subsamples. The first subsample contains financial information about public e-commerce companies while the second one consists of the records of M&amp;A deals. All the sample is divided into groups concerning the direction of the operation such as e-retail, e-payment, e-marketing etc. The subsample of public companies was used to create market multiples and the subsample of M&amp;A deals records was used to test them for validity. This showed strong significant results</p>