Edwin - 3:15 pm on Mar 11, 2010 (gmt 0)
These days, when the return on "cash in the bank" is often 1% or less, selling a site for 3-4x annual revenues is effectively handing the buyer a 25%-33% ROI.
Obviously, the web is a highly volatile environment, but for large well-established sites with years of earnings history and a strong pattern of traffic from well-diversified sources, I would have thought the multiples should be a lot higher to justify selling since even if you take taxes out of the equation, a site earning for example $25,000 a year would sell for $100,000 at the top end of the above range, but that $100,000 in the bank is going to bring in less than $1,000 a year!
Of course, if you use the funds to pay off debt, your own ROI could be a lot higher. For example, paying off a 7% mortgage brings you an effective 7% return on the money and greater security (but you're still far short of the 25% keeping the site would have brought)