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Historical Valuation Bases and Drivers of Large Internet-Enabled Companies

In: Innovation in Sustainable Management and Entrepreneurship

Author

Listed:
  • Adelin Trusculescu

    (Politehnica University of Timisoara)

  • Claudiu Tiberiu Albulescu

    (Politehnica University of Timisoara)

  • Daniel Paschek

    (Politehnica University of Timisoara)

Abstract

As industries develop, the factors driving their valuations also change. During the initial development phase, perceived business potential is the main factor, while during the growth and maturity phases, other factors such as size, market position, and lastly profitability and cash flow become the main drivers. The study looks at the evolution of the valuation bases and drivers expressed as enterprise value multiples and growth and profitability margins over a period of ten years for large Internet-enabled companies. The study includes all companies in the Internet economy with an enterprise value of over EUR 10 billion. The study aims to test if “winner-takes-it-all” economies experience different trends and consequently ignore vertical segmentation. The study concludes that large Internet-enabled companies switched from revenue to profitability valuation bases about eight years ago (compared to vertical focused studies showing three years) and from growth to profitability drivers about six years ago (compared to vertical focused studies showing last year). The findings are interesting for researchers in the field as it demonstrates that large “winner-takes-it-all” players face different investor expectations compared to other players.

Suggested Citation

  • Adelin Trusculescu & Claudiu Tiberiu Albulescu & Daniel Paschek, 2020. "Historical Valuation Bases and Drivers of Large Internet-Enabled Companies," Springer Proceedings in Business and Economics, in: Gabriela Prostean & Juan José Lavios Villahoz & Laura Brancu & Gyula Bakacsi (ed.), Innovation in Sustainable Management and Entrepreneurship, chapter 0, pages 283-296, Springer.
    • Handle: RePEc:spr:prbchp:978-3-030-44711-3_21
    DOI: 10.1007/978-3-030-44711-3_21
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