My 1999

"Mr. Xu, I've heard of him for a long time."

Jean Foch enthusiastically held Xu Liang's extended right hand.

"I have also admired Mr. Foch for a long time."

After exchanging polite words, they sat down on the sofa in the reception area next to them.

The secretary served coffee, and the two of them took a few sips.

Jean Foch was not prepared to beat around the bush.

"Mr. Xu came to Paris this time for the Vivendi game, right?"

"good."

Xu Liang nodded.

After waving, Lu Hui quickly opened her briefcase, took out a stack of documents and handed it over.

Xu Liang took it and took a look at it before placing it in front of Jean Foch.

"Mr. Foch, please take a look. This is the development of our Hongmeng company in the past three years from its establishment in 2000 to now, as well as the valuation given to us by valuation companies such as PricewaterhouseCoopers and Deloitte."

Jean Foch brought it over and took a look.

He was calm at the beginning, but as he went on, his expression became more serious.

He didn't know much about Internet companies.

But looking at revenue alone, Hongmeng's development is extremely rapid.

In 2000, Hongmeng's net revenue was still 429 million Chinese dollars.

By 2001, Hongmeng's net revenue increased tenfold to 4.89 billion Chinese dollars.

As of 2002, in more than nine months, it has generated revenue of 14.3 billion Huaxia coins. According to the monthly growth rate, it will definitely exceed 16 billion for the whole year.

Although the overall growth rate is not as good as last year, the volume is greater.

Based on Hongmeng's current net profit of 3.3 billion Huaxia coins, and based on a valuation of 20 times, their market value has reached US$8 billion.

However, although he is the CEO of Vivendi, he also knows that the valuation of technology companies is definitely not like that of traditional companies.

20 times is too low.

If Hongmeng were valued at a price-to-earnings ratio of 35 times when it last raised capital, Hongmeng’s market value would be US$14 billion.

This growth rate is amazing.

However, it was precisely because the growth was so fast that Foch felt a sense of unreality lingering in his heart.

He knows that Internet companies are developing rapidly, and Yahoo and Amazon are examples.

But he wonders if Hongmeng will eventually follow in the footsteps of the two?

Yahoo has fallen from more than 100 billion to less than 20 billion now, and Amazon's market value has fallen from nearly 70 billion US dollars at its peak to less than 8 billion US dollars now.

If Hongmeng really soars into the sky in the end, that's it. If it dies halfway, Vivendi, which holds too many Hongmeng shares, will suffer a big loss.

"Mr. Xu, you have created a great company, and its development speed is astonishing."

Jean Foch sighed.

A smile appeared on Xu Liang's face.

This is an Internet company. Once it develops, its speed far exceeds that of traditional companies.

Just like Google, in 2001, its net revenue was only US$86 million and its net profit was US$7 million. By 2002, net revenue had more than quadrupled to $439 million, and profits soared to $100 million.

By 2004, Google's revenue had climbed to US$3.2 billion, with net profit of US$399 million.

The growth rate is almost several times every year.

Hongmeng is growing faster than Google because they not only have search but also gaming business.

The launch of games such as "Legend of Hot Blood" and "Miracle MU" directly increased Hongmeng's revenue by nearly 1.5 billion Huaxia coins.

Moreover, in China, South Korea, Southeast Asia and other places, the scale of the online game industry is also growing explosively.

In 2001, China's online game market was less than 400 million, and it tripled the next year.

In the words of later generations, this is the outlet.

Hongmeng is the roc that rides on the wind in one day.

"However, Hongmeng is developing so fast that it makes me feel a little unreal. It reminds me of Vivendi, which has expanded through mergers and acquisitions before. So I want to ask Mr. Xu, can Hongmeng really guarantee long-term development in the future?" ?"

Xu Liang raised his eyebrows slightly, and then said confidently.

"Mr. Foch, the Nasdaq crisis has passed. Yahoo, Amazon, and eBay that have overcome the crisis are all developing rapidly, and Hongmeng has still made amazing progress even in the environment shrouded by the Nasdaq crisis.

So there is no doubt about Hongmeng’s future. "

Saying that, Xu Liang once again took out a stack of documents and placed them in front of Jean Foch.

"Mr. Foch, this is the investment letter of intent that Hongmeng has received from major venture capital institutions, including Morgan Stanley, Goldman Sachs, Sequoia Capital, Kleiner Perkins Caufield \u0026 Byers and other world-renowned investment institutions.

You can suspect that I am boasting, but it is impossible for so many of the world's top investment institutions to be blind. "

Jean Foch looked at the term sheets one after another.

Most of the doubts in my heart gradually disappeared.

After reading all the documents, I took a slight breath.

When he looked at Xu Liang, his eyes showed a little more respect.

In all investment term sheets, Hongmeng's valuation is above 10 billion US dollars, without exception.

This is strength.

He respects strong people.

"Mr. Xu, I admit that Hongmeng's future is worth looking forward to, but your company's conditions do not have obvious advantages over Sony and Microsoft. Especially now, we at Vivendi need cash more than equity.

In addition, I also want to find out, at what valuation will you do business with us? "

"50 times the net profit valuation." Xu Liang said.

When Hongmeng International raised funds in its A round, the valuation multiple was 35 times net profit.

But that was more than a year ago.

Now that the Nasdaq crisis has passed, the bright future of the Internet has become increasingly clear. As the world's top Internet company, Hongmeng has scarcity.

At the same time, there is an environment in which the Federal Reserve cuts interest rates and releases money, the dollar is flooding, and the pockets of investment institutions and banks are bulging.

This is the basis for Xu Liang’s call for a fifty-fold valuation.

Of course, he didn't yell blindly.

In 2004, Google's net profit was US$400 million, and its listing valuation was US$23 billion.

A simple conversion is a valuation of 60 times.

Of course, the current global Internet environment is not as good as it will be two years ago.

But Xu Liang didn't ask for such a high price.

"No, it's too expensive."

Jean Foch shook his head quickly.

At a valuation of 50 times, based on Hongmeng’s net profit, its valuation can reach US$20 billion.

This data is too high.

"Mr. Foch, this is a very reasonable quotation. I think you know that even in the depths of the Nasdaq crisis, Hongmeng's valuation has still reached 35 times net profit, let alone now?" Xu Liangdao .

"We can accept a valuation of 35 times your company." Jean Foch said quickly.

Xu Liang shook his head simply.

"impossible."

According to his plan, Hongmeng International will officially launch Series B financing in the middle of next year. If Vivendi accepts 35 times the conditions now, it will be almost impossible for Hongmeng to raise Series B financing to 50 times.

We don’t worry about scarcity but inequality. Why should Vivendi cost 35 times and we need 50 times?

Even if he insists on this offer, he will arouse the hostility of all investment institutions.

Therefore, for the overall interests of Hongmeng, he must not compromise.

"Mr. Foch, I think both of us can take a step back. If you accept our valuation, we will spend US$2.8 billion in cash and equity to purchase Vivendi Games."

Foch shook his head again.

"Mr. Xu is really smart. At a valuation of 50 times net profit, Hongmeng's valuation has increased by 30% compared with 35 times.

According to your previous conditions, half of the acquisition price of Vivendi Games will be paid in Hongmeng shares.

The total acquisition amount of US$2.8 billion includes US$1.4 billion in equity. If the payment is 30% less, only US$980 million in equity or cash is actually required.

Adding in $1.4 billion in cash, only $2.38 billion is needed.

Compared to Microsoft's US$2.6 billion in cash, Sony's US$2.7 billion is far behind. "

Faced with doubts, Xu Liang pondered briefly.

"Mr. Foch, in order to resolve the dispute between you and us, we can sign a supplementary agreement."

"Oh, please speak?"

“Our next negotiations are still based on 50 times net profit.

But six months after the contract is finalized, if Vivendi feels that Hongmeng’s equity value is still not worth 50 times its net profit, it can ask us to repurchase it at a 10% increase from the original value.

What does Mr. Foch think of this condition? "Xu Liang said.

It would only take half a year for his speculation in oil to be over.

At that time, there will be enough funds to repurchase Vivendi's Hongmeng shares.

Jean Foch looked thoughtful.

This repurchase clause does eliminate the worry of Hongmeng's equity depreciation. Six months is not a long time, and the 10% return is also very generous.

"Mr. Xu, we need time to think before we can answer you."

Jean Foch said.

"Okay, I'm waiting for your good news." Xu Liang said.

Jean Foch's answer did not surprise him.

Although Hongmeng’s conditions are excellent, Vivendi, which is now focused on making money to pay off debts, still has to look at the offers from Microsoft and Sony.

Xu Liang slowly stood up.

“Six months later, Vivendi activates the buyback clause, which means that it can get an additional US$140 million in cash; if it does not activate, it means that Hongmeng’s equity value is higher.

Mr. Foch is a smart man. When weighing, he must consider all interests clearly. "

"Of course. Mr. Xu, please rest assured that Vivendi only wants money. Whoever pays more can take away the Vivendi game. Currently, Hongmeng's US$2.8 billion is the highest and the most sincere.

As long as our internal discussions pass, I believe Mr. Xu will receive good news. "

"I'm really looking forward to it."

After the two shook hands briefly, Xu Liang left.