Sometimes a company can be valued based on its subscribers or its customer accounts. Subscriber-based valuations are most common in media and communication companies that generate regular, monthly income -- like cellular, cable TV and online companies. Often, in a subscriber-based valuation, analysts will calculate the average revenues per subscriber over their lifetime and then figure the value for the entire company based on this approach. If AMERICA ONLINE has six million members and each sticks around, on average, for 30 months, spending an average of $20 a month, the company is worth 6 million times $20 times 30 or $3.6 billion. This sort of valuation is also used for cable TV companies and cellular phone companies. For instance, Continental Cablevision was bought out for $2000 a subscriber.

Another way a company can be valued on members is based on accounts. In the healthcare informatics industry, companies are routinely acquired based on the value of their existing accounts. These acquisitions often completely ignore the past earnings or revenues of the company, instead focusing on what additional revenue could be conceivably generated from these new accounts. Although member-based valuations seem rather confusing, their exact mechanics are unique to each industry. Studying the history of the last few major acquisitions can tell an inquisitive investor how the member model has worked in past mergers and can suggest how it might work in the future.

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