Yet another data point for our ongoing “what is Facebook really worth?” survey: An investment banker tells us he sold a tiny slice of the company this spring at a valuation “north of $6 billion“.
The deal, we’re told, was agreed to in April and closed in May: Two different hedge funds bought about 0.10% of common stock — about 10 basis points, total — which came from more than one Facebook employee. Total purchase price for the transactions: “Mid- to upper-seven figures” — i.e, $6 million-plus. If the tale is accurate, that means Mark Zuckerberg’s company is worth more than we thought — but still much less than the $15 billion valuation announced last year.
A quick recap of of what we have so far:
- Microsoft invested $240 million at a supposed $15 billion valuation last October, but no one believes that number because A) Microsoft was likely getting preferred shares and B) Microsoft was making the deal for strategic reasons (it wanted access to Facebook’s ad inventory, and a relationship with Mark Zuckerberg), not financial ones.
- Last month Mike Arrington reported that a California money manager was peddling shares at a $3 billion to $4 billion valuation, and we heard separately about a Facebook employee looking to deal shares at a $5 billion valuation.
The caveats: We haven’t spoken to either the buyers or sellers to confirm the deal, and there’s an obvious incentive for our banker source to inflate the value of the transaction — so he can peddle more shares at the same price. But it does jibe with vague rumours we’ve previously heard, and while we won’t disclose the identity of the banker or his firm, we can confirm that both are real.
In any case, it’s an instructive tale, if only to point out that a company like Facebook will be almost impossible to value “fairly” until it either gets acquired or goes public. Not only is it a private company with mostly illiquid equity, but getting a sense of its real revenue and profit potential is just about impossible, since the company doesn’t seem to have clear business plan itself. Until it does, it’s going to be a “name-your-price” company.
So: What’s your price? Let us know in comments below.
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