WSQuant - 7:20 pm on Jul 1, 2005 (gmt 0)

For a site making 10k/month i would be willing to pay 12 months earnings. For those sites you can assume they are doing something right and have a somewhat steady stream of traffic. A site making $600/month can be gone tomorrow!

I think you would be very hard pressed to find a site making 10k a month from a somewhat steady stream of traffic for only 1 years earnings and I did find one I think I would be skeptical of buying the site for fear that earnings couldn't stay that high for long.

Buying a business based on current earnings is not an "old school MBA" mentality, it's what's done day in and day out thousands of times everyday all over the world.

I would have to say that the majority of educated business men aren't going to be buying any business based off of current earnings regardless of the business. Most times a DCF (Discounted Cashflow) model is used to calculate the worth of a business. The inputs to that model directly related to the business being examined are projected earnings growth and perceived risk. The latter is why I would never pay more than 6-10 months earnings for a website that isn't very well established.