Home Health and Hospice Care Data

We at VR believe that home health care industry is amazing and has amazing potential. Please see below our M&A research and public comparables. A few things to note: EV/Revenue is about 0.8-1.2x in the industry, and EV/EBITDA is 6-9x. You can download the Excel file here.

Featured Research Lists

We have decided to create a set of interesting research lists that showcase some of our amazing valuation work, research, M&A data, etc. Please enjoy and check back often as we will add to the list regularly!

• Valuations of Social Networking Companies
• Home Health Industry Multiples
  

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"Great job! This was really very helpful and I must say that I am very pleased with the results. It does shed light on revenues that some of the smaller startups had when acquired and also acquisition multiples. I appreciate your efforts and have made sure our partners know about this!" --Associate at Top-Tier VC Fund

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"The Valuation Tool is amazing." --Venture Returns Registered User

"Venture Returns a web site devoted to figuring out valuations. Not only do this have some nifty tools to help you do this, they also have a very nice listing of companies in every category. If you're still stuck, you can request comps in a very specific market and within a short period of time, they will give you a list. Highly recommended." --Fryer's Blog in the Mountains

How is the Financial Crisis Affecting the Values of Social Networking Companies

Social networking companies are probably among the most difficult companies in the economy to value. The primary reasons include:

1. There isn't much data about them
2. There haven't been that many exit transactions for these companies
3. While many financial analysts feel that their business model is suspect and that their valuation multiples are unjustified, acquisitions of these companies have demonstrated very, very high valuation multiples

Take, for example, the case of Facebook. Microsoft acquired a 1.6% stake in the company valuing it at $15B. This represented a 100x EV/Revenue ratio and an astounding estimated 429x EV/EBITDA ratio. When we went to come up with valuations of the world's top social networking sites we were seriously challenged because on the one hand we are equally doubtful that these companies underlying fundamentals are adequate to justify such high valuations but simultaneously we personally believe that Microsoft would probably be willing to buy all of facebook at $15B. This last point ended up trumping the first point--because valuation experts generally agree that "fair value" refers to "the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relevant facts." So we believe that Social Networks are generally worth what other companies are willing to pay for them--which despite the crazy financial crisis is still probably quite high. In any case, you can see how valuation ratios for social networks have been harmed by the financial markets here. Median EV/Revenue ratios have fallen from 10x to 3.5x and median EV/EBITDA ratios have fallen from 25x to 12.4x.

Here is our list of Social Network valuations--click on the hyperlink to see the valuations:

1. Facebook: 2008 Revenue--$325M
2. MySpace: 2008 Revenue--$755M
3. Classmates: 2008 Revenue--$91M
   
4. LinkedIn: 2008 Revenue--$65M
   
5. Reunion.com: 2008 Revenue--$60M
6. Bebo.com: 2008 Revenue--$32M
7. Tagged.com: 2008 Revenue--$16M
8. Friendster: 2008 Revenue--$10M

Let us know what you think or simply create your own valuation using your tool if you disagree with our high valuations!

New Features: Google Maps and Comparables List Search

Hey everybody! We are pleased to announce the release of several new features. First, we have completed the first phase of our integration with Google maps.

You can now see a picture of map of the location of individual funds and companies. Next up is the ability to see all of the funds, companies, and even deals in our database. You will be able to map these by sector, drill-down by region or state, and explore different relationships between companies. For example, you may want to see all of the companies, fund, and deals related to the conveyor belt industry. We can map all of these for you. You may want to see the geographic location of all of Google's acquisitions, we will soon be able to do that for you.

We have also released a great new feature for our Valuation Tool. You can now search for Comparables (or Industry Comps) Lists by simply typing in the name of a company, ticker or a keyword. So if you want to see all of the Comps or Industry Lists in which Microsoft is included, you can type in "Microsoft" or "MSFT" and you will be able to see all of the lists in which the company is included. This is very helpful if you know the name of a competitor company but you don't know the name of a particular industry or sector list.

Why Rules-of-Thumb Don't Work

We have noticed a bunch of new online valuation services cropping up. Some of them create valuations based on things like the number of years of management team experience, the board of directors of the company, or industry rules-of-thumb. While they may be interesting, most of these "black box" approaches to valuation would get you fired if you worked at any firm or company that takes valuation seriously. Valuations are almost always based on one of three methods:

1. The Asset approach. This basically views a company as a collection of assets. While this method can definitely work, it doesn't work especially well where the company is clearly worth more than the collection of its assets. Its the old "the whole is more than the sum of the parts" argument. Valuing certain entities can work well this way but it really doesn't work well at all in valuing high-growth companies--PE or VC backed companies.
2. The DCF or Income approach. This is where you forecast the company's financials and then apply a discount rate or "hurdle rate" to forecasted profits to come up with a valuation of the company. This is the most comprehensive and generally accepted method. However, it doesn't really work very well for early-stage or high-growth companies since getting the basic inputs to do the valuation involve too many assumptions.
3. The Multiples Method. This is where you take the company's existing financial results and apply an industry valuation multiple the the results. This is a very simple and effecitve approach. It works well when the company has steady and stable revenue or forecasts. However, using "rules of thumb" where you apply general multiples that are based on data that is static and doesn't update for changes in the economy or the industry will give you very inaccurate results. Valuation is particularly susceptible to the garbage in, garbage out problem. You should always use very specific industry multiples that are very specific to your particular industry. Second you shouldn't just use rules of thumb for "restaurant industry comparables" but you should use comps that are based on actual data from recent M&A transactions. Just like the valuation of public companies change based on macro-economic and industry-specific factors, the valuations of private companies change as well. Using canned multiples that don't change is not an accurate approach to valuation.
4. There is a hybrid method that combines 2 and 3 called The First Chicago or Venture Capital Method. See here for the wikipedia entry. This method combines the best of approaches 1 and 2 above and it is the preffered valuation method for most VCs. This method involves using a multiples based valuation applied to current financial results and to _future_ results which are then discounted back to the present. It works as well for companies that have little to no revenue currently or companies that have revenue and EBITDA but are growing rapidly. If you combine this method with a very good ability to find specific industry comparables, you can arrive at a defensible valuation.

Venture Returns primarily uses the second, third and fourth types of valuation. We don't do a good job yet of exposing a full DCF but we are working on that currently.

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