Goldman Sachs' savvy Facebook deal
It's no secret that top investment banks are yearning to form relationships (as bankers and investors) with social media companies. Recently, the urgency was stoked in large part by Goldman Sachs' savvy courting of Facebook, the uber social media company.
Recall that Goldman Sachs has invested $450 million and committed to raise another $1.5 billion for the company from clients. For that effort, it is thought to be in good position to take the Facebook public next year. A specific date has not been set, but the first quarter of 2012 is what many assume to be the current target. Goldman Sachs's efforts have already come to fruition, according to CNBC, which notes that the valuation of the firm has roughly doubled since the last fund-raising round led by Goldman Sachs.
The likely valuation when Facebook goes public next year? It could be in the $100 billion range, or 100 times 2010 revenues. It's still not the most valuable of the big-name Internet firms. Google still rules the roost, with a valuation of $163 billion. But Facebook comes in second, ahead of third-place Amazon at $84 billion.
So is the IPO destined to be a Google-like blockbuster? Well, the environment for IPOs in general and social media companies in particular could be radically different next year. The current crop of social media IPOs could be languishing in the aftermarket by then, and investors could prove to be less enthusiastic. The conventional wisdom on Facebook as the next Google may not survive. Already there are signs that the user base is growing more slowly.
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