Virtual Companies are More Valuable

BY David Rowat

Virtual Companies are More Valuable

Presentation to the UBC Sauder School of Business

January 20, 2020.

 

Virtual companies attract higher valuation in an exit transaction than comparable bricks and mortar companies.  It may seem counter-intuitive.  A virtual company only exists online. Employees communicate online from wherever in the world they happen to be.

How can a company with no physical head office, and few fixed assets be worth more than a traditional company with an established presence?

This new work structure seems nebulous, but in fact, the lower cost and greater agility of virtual companies is proving to have significant advantages over conventional bricks and mortar companies.


HIGHLIGHTS OF THE NEW ADVANTAGES CREATED BY VIRTUAL COMPANIES

Virtual companies:

  • Are easily established, efficiently financed, and quickly scaled
  • Are creating new, leaner corporate structures
  • Can nimbly exploit new opportunities
  • Provide a better work-life balance, especially for women, and are better for the environment
  • Attract the best workers worldwide, and supersede geographic boundaries
  • Are more profitable
  • Minimize corporate income taxes, and taxes on the sale of the company
  • Are worth substantially more to buyers and sellers

We review the acquisition of a virtual company which recently sold for over $100 million in under 60 days.