How to value internet companies. By Stuart Whitwell

Placing a realistic value on an internet company is difficult. Ideally, the valuation should be no different from that of a bricks and mortar company; predicting future cash flows through an understanding of the business and market dynamics. However, internet companies are still a relatively new phenomenon and there is often little robust historical data to support the valuations. Internet companies are also, by nature, unpredictable. They can enjoy huge success for a short while and quickly plummet into obscurity.