Since the inauguration of the International Space Station in 2000, and accelerated with the termination of the Space Shuttle Program in 2011, the private sector has been given an unprecedented opportunity to lead the commercialization of space. From satellite launch and operation, to cargo deliveries to the International Space Station, space tourism, mineral prospecting, and colonization, the commercialization of space is capturing the imaginations of entrepreneurs and the attention of investors. Though a relatively small industry today, the private space commercialization industry promises to expand as technology improves, terrestrial resources become more scarce, and ideas for deriving value from space exploration proliferate. It is increasingly likely that appraisers will encounter opportunities to service companies in this industry. Join Michael Blake and get a launching pad for appraising companies in this young and dynamic industry.

• Industry overview
  
• Most likely applications of space company appraisals (i.e. 409a, fair value accounting)
  
• Industry-specific considerations
  • Inherent danger (people can easily die in space or en route to and from)
  • Regulatory framework (FAA spaceworthiness regulations, Outer Space Treaty of 1967)
  • Long business and technology validation periods
    
  • Very high capital requirements are typical (financing risk, and future dilution highly likely)
    
  • Likely dependence upon government grants and/or contracts for early business viability
    
  • Possibly competing with national space programs
    
  • No realistic benchmarking
    
  • Securing technology/engineering talent can be a challenge
    
  • Key person likely to be the person most responsible for funding
    
• Differentiation among sectors (cargo, satellite, mineral prospecting, research)
  
• Competition is generally visible
  
  • Press releases and blogs
  • Aviation Week and Space Technology
    
  • NewSpace (conference and news list)
    
  • American Institute of Aeronautics and Astronautics
    
  • The Space Foundation/The Space Report/Annual Space Symposium
    
• Approaches for valuing space commercialization companies
  
  • Asset approach – only useful if the company is *very early stage* or is about to go under
    
  • Market approach – Likely limited usefulness as there are few transactions or pure play guideline public companies, though perhaps just enough to squeeze volatilities for OPM and option-driven DLOM models
  • Income approach – DCF, Real Options
    
    • Must project markets into a very long time
      
    • If in litigation, insist on retaining industry expert to vet valuation models
      
    • Terminal values are potentially gigantic
      
    • Discount rates can be very high – 90%+
      • IRS discounts
    • DLOC – no particular special considerations
      
    • DLOM
      • Likely small universe of buyers
        
      • Dividends are unlikely

• Understand what separates the space commercialization industry from other industries
  
• Be exposed to which valuation approaches and techniques are most likely to work best with space commercialization companies
  
• Learn how to apply industry-specific features to conventional valuation models
  
• Learn key research resources to find data (and make networking contacts)