book value of a company

[terri_f]

Hi,

I was wondering if anyone could tell me how to determine the "book value" of a company. I work for an internet company -- they want me to relocate to another state but I feel that wouldn't be prudent at this time so my job is going to be terminated.

When we met to discuss my relocating, I was told that the company was worth $5 million. When I signed on with the company almost 2 years ago, I was given a small amount of stock -- now (10 days later) they're telling me that the company is only worth $370,000.

So, what I'm wondering is: how exactly do you calculate the book value of a company?

I appreciate anything anybody can tell me about this.

Thanks,
Terri

 

[Internet Guru]

NO ONE can perfectly value an Internet company and I own most of one! It is what the market calls for. Amazon is losing a ton of money and always has, yet its CEO, is worth $6 billion or so.

Trationally "book value" is assets minus liabilites divided by the number of shares outstanding. That makes no sense in any Internet Company.

 

[terri_f]

Thanks for the input, I really appreciate it, especially since you're in somewhat the same position as my employers. Now, if you don't mind, please let me ask you this:

If it were you faced with the same scenario, and I were the employee who had been with you from the start of the business, how would you value the shares that I have (which, according to the employment agreement, must no be sold back to the company)?

Thanks very much,
Terri