Leave it to the Internet.
Goldman Sachs just awarded a $50 billion valuation to Facebook. And in a shrewd branding maneuver, the storied financial behemoth is offering its high-net-worth clients the option to co-invest in the world’s leading social media site.
Is the investment opportunity exclusive? Absolutely. Will there be a fee? You bet.
Before investors jump in with their big boots, however, I encourage them to review the groundbreaking analysis—which I unearthed over at Herding Cats. This chart debunks the $50 billion valuation and even suggests some New Year’s resolutions if you’re late to the 2011 party.
The New York Times describes my novels as “money porn,” “a red-hot franchise,” and “glittery thrillers about fiscal malfeasance.” Through fiction I explore the dark side of money and the motivations of those who have it, want more, and will steamroll anybody who gets in their way.
Goldman Sachs are savvy investors but that does not mean there advise has always been satisfactory.
I recall when Netscapes was going public and many of us purchased shares in the company.
Are you commenting: “If it is too good to be true, people should be cautious with this investment?”
My best guess is that FB will flourish. But all companies stumble at one time or another, and I bet the $50 billion valuation will be tested for reasons nobody anticipates. (FB is private, so I’m going on instinct rather than any knowledge of the financials.)
That said, the co-investment opportunity has the kind of baggage I hate when advising: a stiff front-end fee of 4 percent, no liquidity until 2013, and a 5 percent profit participation.
There is no sign of Facebook going out.
Agreed. FB is reinventing media.
But look at the history. The Winklevosses are suing over private market valuations. They agreed to a $35.90 price per share based on Microsoft’s $15 billion valuation.
A few days before the deal closed, FB’s board approved a valuation of $11 billion from a third-party expert. The WV twins contend that they were due more shares.
Last I looked, MSFT is full of smart people. Did they pay too much? Same thing at Goldman. Private valuations are always tough.