Value of the MSM App and Brand, page-3

The value of the business isn't just going to be the cost to build the app and the brand. It is the value of expected future earnings that are key. It is the team, the intellectual property etc.

Then you look at what sort of multiple you would apply to those potential earnings based on the growth prospects. Obviously this is problematic because we don't know what the earnings will be.

One thing I would suggest is that their steady state overheads are actually pretty low. They have burned through a lot of cash this year due to product development and marketing, which are not BAU activities. So once the revenue does start coming in, the returns to scale will be very good - especially if partnerships like the one just announced are fully funded in terms of incremental costs.

This app took a couple of years to fully develop, test and launch. It is not easily replicated and MSM has the advantage of being first mover. If it was easily replicated, Riva would have just done it themselves.

So its not a question of do we think what has been created to date is worth X amount. The question is do we think what can be earned from what has been created to date is worth X amount.