Good post, Gangrel. Yes, I think that's pretty much spot-on, as I'd estimated in my original post on the topic some time back:
Now, from what I've seen and understood of the financial state of Paragon Studios and CoH, as a company it would likely (my opinion and estimate only) be valued at around $100 million as a complete business to takeover. Remember, that's isn't to make a profit for shareholders, that's it reasonable value, so to speak. In my professional opinion, anything lower than a value of around $50 million would be a complete insult.
I can tell you that I know (but cannot divulge my sources) that none of the offers made to NCsoft for CoH were anywhere near even half of that. Steam offered something like $3million plus some profit share. Imagine how such an offer as that must come across to a people whjo are known to be concerned about saving face and not insulting people. Wow. I wouldn't even speak to such insulting people either.
The other offers were all ridiculously low too.
That's not Steam's fault. To them, CoH is seen mostly as low-hanging fruit, able to be easily plucked. A game that is 8 yrs old, with small profits, in an ever-increasingly competitive market, and with a declining customer base. Oh, and during a recession.
Of course, values on things are always a tricky business, and effectively, a pure guess.
As a general rule, a service business is valued at around its annual turnover, because Service businesses have very low barriers to entry, and are effectively dependant on the staff who provide the service (who may leave in a takeover). Meanwhile a tech business is generally valued at 2-5 times its annual turnover, dependant on the amount of patents and intellectual property, because those create far higher barriers to entry. But all of these valuations are based on the idea that just because a business did X amount of business last year, it should do about the same this year, and could do better if better managed...
The selling price of a thing is really determined by the guesses of two different parties. The value the seller estimates his thing has, and the value that a potential buyer estimates the thing has. Usually the two negotiate to some kind of compromise, but only if there is room somewhere in the middle. If the two different opinions of value are just too far apart, generally no negotiation happens.
You can understand why Steam would offer so little for the game, considering they'd been mailed and told it was basically dead in the water and ripe for a low-ball bid to steal. I can conversely understand why NCsoft may be asking so much, though I do think they are being unrealistic in the current economy and market (the increasing number of choices in MMOs in the market do mean that each can expect less market share, etc, current economic predictions are bearish on MMOs, and there's a global recession).
Of course, my initial valuation estimate was made assuming that it would be a takeover of the entire business, premises, staff, etc. However, since the staff and premises both add ongoing costs, especially with the heavy over-staffing at Paragon due to development, these things don't add as much value to the business as you may imagine. They just save a company having to organise location and recruitment for themselves. The servers are not necessarily a major cost either, so again, including or excluding a load of second-hand servers may not affect the value that much either.
I personally think that all of the offers made by outside companies, including Steam, were at least under half what they'd have needed to be to be taken as a serious point of negotiation. Ten million *might* have been enough to start a serious discussion, but less than 5? No.