CHAPTER 237: CHAPTER 237: HOW DOES THIS COMPANY MAKE MONEY?

Chen Yiyang frowned more and more as he looked.

The boss of the web gaming company noticed Chen Yiyang’s unease and quickly said, "Actually, our company’s games have always been profitable. Although the quality might be lacking a bit, there’s still a good market for them now."

"How much does it cost to run the company for a month now?" Chen Yiyang asked directly.

"Including rent and miscellaneous expenses, about four million a month."

"Four million." Chen Yiyang rubbed his chin.

Four million isn’t much, considering it’s a team of nearly a hundred people.

Most of these costs should be payroll expenses.

"What about the profits?"

"Last month, we made ten million."

Hmm.

Chen Yiyang silently calculated in his mind.

Don’t just look at the boss saying they made ten million last month and really think this company can make over five million every month.

If this web gaming company truly had such earning power, why would the boss be selling it? It’s just a plain cash cow.

Chen Yiyang estimated that what the boss said about making ten million last month was true. But with mobile and web games, if the company is really shameless and runs various discount and spending events, they can boost revenue in a short time.

But there’s a price to pay for this. The increase in short-term revenue is definitely accompanied by a massive player loss.

And if you want to run similar events next month, the players who spent money last month will feel that you’re just exploiting them and backstabbing players, and will refuse to spend more.

So this month they can make ten million, but next month they might barely manage five or six million.

In a few more months, if they don’t launch a new game to rake in money, they might not even be able to cover wages.

"Do you own 100% equity in this company, and how much do you plan to sell it for?"

"How about five hundred million?" The boss of the web gaming company cautiously looked at Chen Yiyang.

"This price is insincere." Chen Yiyang looked up at the other party and said, "I’ve also invested in many game companies. Just because I don’t say certain things doesn’t mean I don’t know them. Your revenue last month was ten million, but can your annual revenue reach one billion?"

"Because now everyone is using smartphones more, our revenue has decreased, but we have already started transitioning to mobile games, and in fact, our product is already developed."

"Can I take a look?"

"Of course." The other party readily agreed.

Then Chen Yiyang saw the mobile game the other party developed.

It was basically a blatant copy of the pay-to-win web game onto mobile.

Artwork, gameplay, even the UI was hardly changed.

"It’s awful." Even Chen Yiyang, who has played many terrible games, couldn’t stand this one.

"Our game is targeted at the generation who once played ’Legend,’ about forty years old."

This generation played Legend in their youth and is now middle-aged. Most of them have some money in their hands and are willing to spend on games. So maybe young people like you can’t understand our game."

"I might not understand the game, but I understand revenue. Can I see the company’s revenue over the past few years?"

"This involves the company’s secrets, so maybe you can’t see it before signing a contract."

"This is confidential, that is confidential. If you won’t show it, then there’s no need to talk further."

Chen Yiyang stood up directly and left the company with the young accountant.

"Why are you so irritable today?"

After leaving, Chen Yiyang and the young accountant found a restaurant and chatted while eating.

Halfway through eating, the young accountant dared to ask why Chen Yiyang lost his temper at the web gaming company today.

"Your dark cuisine made me irritable." Chen Yiyang joked.

"Oh, so it’s my fault. Then I won’t make breakfast for you anymore."

"No, no, no, just kidding." Chen Yiyang quickly said.

"The main thing is, I can’t figure out how this game company could be worth five hundred million."

The reason Chen Yiyang got angry today was straightforward: he couldn’t figure out why this acquisition was considered a bargain.

In previous bargain investments, there have been seemingly hopeless companies.

But those companies had some unique features.

However, the intelligence provided on this web gaming company, frankly speaking, there are many like it domestically.

Chen Yiyang couldn’t immediately understand how this game company would make money in the future.

This is very important.

While Chen Yiyang is buying this company, the question is how much to pay for it.

If he were to follow the boss’s offer of the web gaming company, buying such a company for five hundred million would be the same as giving money away, and his reputation as a fool would spread.

So Chen Yiyang got angry just now, first to leave the company and think about how a web gaming company could suddenly become massively profitable in the future.

Secondly, to pressure the other party’s boss, to lower the acquisition price and avoid overpaying.

A few days later.

Zhang Yuling had arranged a negotiation time with Ali’s people, and after getting up, Chen Yiyang prepared a little and hurried over.

After all, the equity of Fei Peng Automobile is a major business worth over a billion, so this time Chen Yiyang met with an m-level executive from Ali, named Luo Ping.

After greeting each other, they sat down in the meeting room.

The Ali people were quite skilled at making presentations.

As soon as Chen Yiyang arrived, the other party began showing a presentation, giving a comprehensive introduction to Fei Peng Automobile.

They hyped up a soon-to-be-bankrupt car company as if it was about to soar.

"Currently, Ali owns 11% of Fei Peng Automobile, and our intention is to sell 10% of it."

"How much?" Chen Yiyang directly asked for the price.

"We can accept fifteen billion in cash plus alternative payment methods worth no less than thirty billion in assets."

Fei Peng Automobile currently has a market value of over seventy billion.

Ali is willing to sell 10% of the shares, which works out to be seventy billion.

Selling seventy billion worth of shares for just forty-five billion.

It seems like quite a bargain.

But that’s not how you calculate it.

Fei Peng Automobile is a heavy-asset company. Once it goes bankrupt, the debt issues will have to be borne partly by the major shareholders.

It would mean that not only would the money you spent on the shares be wasted, but you would also have to help the company pay off its debts.

After all, what you are acquiring is stock, not bonds.

If a company goes bankrupt, you won’t get a penny back, and the remaining assets will be auctioned off first to pay off debts.

And the situation of Fei Peng Automobile is evident to anyone; it’s on the verge of collapse.

Their new models sold only six thousand units in a year.

What kind of concept is that?

The profit can’t even cover payroll, not to mention the interest on the money owed to suppliers.

If it were any other negotiation, Chen Yiyang would have left immediately.

But after all, this time he came to support Zhang Yuling.

So even Chen Yiyang had to pretend to be interested and ask, "I have invested in an electric vehicle factory before and am very optimistic about the current new energy market. But Fei Peng Automobile clearly has upper management issues. If I acquire Ali’s shares, can I have a say in the company’s senior management?"