For Sale Website:
Text Me Tix is a company that developed a free app that gives the user last minute deals to sports, theatre, music, and other events. According to our 8-year forecast, the company will steadily be improving and increasing its profits each year. With increasing profits, we believe the company should not be sold but would need additional funding to increase growth so that the company itself may also grow.
We calculated the WACC using T-bill, beta, and S&P return numbers we found on financial websites such as www.treasury.gov and Google finance that had numbers for similar businesses such as Ticketmaster. Some other major assumptions we made were the division of income among the different types of ticket sales based on the number of events in each category that the company had on its website. We also made assumptions of the percentage of sales we would receive acting as the middle-man for the ticket vendors that use the company for a portion of their sales.
Text Me Tix can be a successful business, but it needs to advertise more and gain a larger portion of the market share if it is to increase profits and become an established competitor in event ticket sales. The IRR is higher than the cost of capital and the company appears to be on its way to success, but we must be cautious because many companies that are internet-based often fail. Another issue is the risk involved in the business. The high IRR indicates major growth, but if the company fails it will be a huge loss.