Then again, how many "traditional" IPOs pay out ALL net revenues in dividends? While I agree that the P/E needs to be discounted from 10 because the risks are understated, it is also fair to say that some credit is to be granted for paying out the revenues.
That's a fair point. But it calls into question what is the plan for growing the site?. I mean, the only way this deal makes sense is for share price to rise, the dividends alone are not very attractive. So, if he is *not* reinvesting money into growth, then what?
Anyway, I agree with your larger point. Priced at about a 4x multiple, this deal would be very attractive.
Personally I think he is doing himself a big disservice. Its a strategic mistake to sell a paltry 10% non-voting shares with such lackluster terms. If he made his first tranche of investors a good deal - something that was clear would at least hold the share price - it would set him up get his 10x multiple on the next bigger 20-30% chunks he wanted to sell.
As it stands now, the next time he wants to cash out a portion he is going to be adding lots more shares to the market and people will be still underwater from the first release. Its all ass-backwards.