Valuation

See: 409a Valuation.

Somebody assessed a value here for this private company. Maybe they used discounted cash flow analysis or some other form of voodoo to get there.

For public companies, valuation exercises are pretty easy. Like, for whatever.com, it has 100 million shares outstanding and it trades today on the NYSE for $22 a share, giving it a market valuation of $2.2 billion (100,000,000 x $22).