Simsi - 6:17 pm on Oct 26, 2011 (gmt 0)
For good content, quality aged sites, I would hope to get 5-7 years income
If the traffic sources are varied enough to provide stability in the event of a traffic hit in another algo change then that might be achievable but if, as you suggest, the sites suffered badly with Panda, then that strikes me as optiistic to find a buyer that would go that far.
Having studied the buying and selling of online business it struck me as incredibly rare to find a site with enough diversity of traffic to survive it's major traffic source turning sour. Even when you do, then paying > than 3 years income for an online-only business is a risky strategy. Most deals I see on "solid" sites are 18 months to 2 years. Most...not "all," to be fair.
Hissing Sid's "rainy day fund" idea is very sensible. I think too many businesses re-invest too much of their income to try and chase more $$ when, without the aforementioned stability of diverse traffic sources it is asking for trouble down the line if you don't put some aside. A solid business should ideally have at least 12 months working capital in the bank before re-investment IMO - 6 at a push.
I have to admit it annoys me to see people complaining of Google forcing people out of business. Any business that can't survive one traffic source going down is a flimsily built business in the first place.