Valuation = Sum Total of the Assets:
- + Recurring Revenues x4
- + Code Valuation
- + Patents
- + Brand
- + Trademarks, IP, Service Marks
- + URL(s)
- + Monies Spent on Implementation Standards, Documentation, APIs, Interfaces, etc..
- +Contracts (Partnerships, other etc.)
Deloitte Valuation Mechanics for Software Code : How to determine programmer time costs. These two models provide an estimate of the number of person hours require to write the code.
1. Trended historical cost method
Actual historical development costs such as programmer personnel costs, are quantified (including allocations of costs of items such as payroll taxes, overhead, and a profit element, and excluding time spent by programmers on maintenance and other tasks not related to development) and then time adjusted or trended to the valuation date by reference to an inflation index. The challenge in applying this reproduction cost method is that in many cases, historical records of development costs are unavailable, or may be co-mingled with operations and maintenance costs.
2. Software development cost models
Sophisticated models, created by software developers to estimate production time and costs are useful tools for valuators in determining development cost and in assessing program complexity. The main variable for these cost estimation models is the measure of the program’s size or functionality, which is often measured as the lines of code in the software, or the number of “function points”, a standard measure of complexity used by software developers.
Software Valuation links:
http://www.scalevp.com/a-valuation-framework-for-saas-companies
http://www.inc.com/adam-marcus/whats-your-software-as-a-service-company-really-worth.html
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