Forum Moderators: LifeinAsia
Recently I was approached by a company offering to buy my site. I have no idea how much it values. Below are some basic info of my site
has been around for 6 years
monthly sessions of 100k.
over 1000 high quality inbound links such as by .edu, library, and .gov.
listed by major search engines as popular site
Shows up at top when search Ggogle using one domain word
over 6k registered users
annual net income 150k
owns .com, .net and .org domain
very good vehicle for product sale
Alexa traffic rank 80,000
Thank you for your valuable thoughts.
I've heard that the standard "rule of thumb" for selling a business is 3x its yearly net income. In your case that would be $450,000. I have no idea if that basic rule holds for websites; however, making $150,000 per year I certainly wouldn't sell for less than 3x that amount.
I've heard that the standard "rule of thumb" for selling a business is 3x its yearly net income.
This has been discussed here many times and I can assure you, web sites do not sell for 3x yearly income. Absolutely no way never happen.
You will only get 6 to 12 months income. Period.
Brick and mortar businesses sell for 3-5 years of annual income. Not websites. You will be lucky to get 6-12 months income. Not more then that.
I can assure you, web sites do not sell for 3x yearly income. Absolutely no way never happen.
Thank you for reply.
I don't agree. It happened, and happened to me. You won't believe that I once sold a site with zero income at the price of 5-digits.
If 6-12 month income is the price I won't sell my site. If that is the rule, I am willing to buy any site at the price of 12 month's income.
I am willing to buy any site at the price of 12 month's income.
careful, your stickymail is going to be full fast ;)
I hope you have a few million to spend too :)
If you want to try and sell a site for 3x annual income, go ahead - but don't be surprised when the counter offers are much lower then expected.
...Brick and mortar businesses sell for 3-5 years of annual income. Not websites. You will be lucky to get 6-12 months income. Not more then that.
Not correct, IMO. I believe domain businesses sell for MORE than brick and mortar in that ongoing income is more guaranteed due to the website traffic and domain name value climbing, combined with the very low operating expense and overhead vs a store.
A recent multi-million $ domain sale paid from what I have heard an estimated 10 yrs or greater multiple of income.
6-12 months income. Websites are too vulnerable to events going on right now like Allegra. They have no stability and therefore 3-5 years income is not realistic in 99 percent of cases.
You have been around for 6 years with this site.
you fully understand the ups and downs of traffic and also understand that your site will also maintain x amount of traffic on average no matter what the se's are doing at any particular point.
You have an interested party because they understand the expense of trying to accomplish what you already have.
It's easier andv less expensive for them to simply buy you out then trying to start from scratch.
"over 1000 high quality inbound links such as by .edu, library, and .gov"
sell for 1 year and after taxes you are left with what about 85,000? for something that took 6 years to develop .
Good Luck!
Thinking short term (6 months) may be a sound strategy when dealing with sites with less than 4 figure value, but for larger sites with 5 / 6 / 7 figure annual incomes, the buyer will certainly be considering the long term game.
I would be decidedly pissed if I shelled out 6 figures for a site that was crippled due to an update 6 months later. But then again, I would be pretty stupid to have forked out that kinda cash for such a shakey investment.
I think the smaller the site, then the shorter term income should be considered (around the 6 month mark) to judge the value. As the site increases in size (in terms of content, traffic and income), so should its staying power and stability. Therefore its value would increase as it's a more stable investment.
Scott
He can ask whatever price he wants but the buying trend is not going to support prices of 2-3 years income.
But hey, he's welcome to ask 3 years income, doesn't mean he will get it. I seriously doubt he will get that price.
That's all I am saying.
Of course if I was a buyer I would be on board also telling him to take 6 months to 1 year ;)
I've bought and sold websites myself and never deal in more then 12 months income in either case. It's just too risky.
Those who buy know what they buy so don't worry! 3 yrs income is quite reasonable number, because they plan to push it higher and earn that money in less than 1 year. Good luck and tell us what will happen. Sticky me with URL, thanks.
You just have to evaluate what it's worth to you. In my case, the extras AND the potential add up to a premium price which I have no doubt will be paid for a year from now.
- additional value of included assets (e.g., evergreen content, proprietary software)
- growth opportunity (is the user population growing? is the amount of money being spent growing? what is maturity of business -- has most of the growth been achieved already, or is there lots of upside?)
- incremental revenue/product opportunities -- can the property create spin-offs? Does it support the sales of other properties/products of the buyer?
- registrations -- is there a registration database, is it cleanly qualified so that it can be used for marketing, and is there data about the users to increase usefulness for this purpose? (sometimes valuations are even done on a per-user basis, rather than multiple of revenue)
- competition -- where does the target company sit versus competitors? Is it the market leader?
Not knowing anything more about the site in question (big question, is this a commerce site or content site? that could change the analysis profoundly) ... it would seem that 6-12 months revenue could be a good estimate, or 2-3x annual income, or 1x annual revenue ... it really depends on a variety of issues that will impact the valuation.
You will only get 6 to 12 months income. Period.
I would disagree with that as some of my customers have sold off their online businesses for way more than that.
Heck, if they started from scratch it would take them 6 months just to get close to where this site is currently selling - IF EVER. Not to mention all the money they would have to spend on web design, SEO, advertising, etc. etc. just to get there.
If someone is serious about buying your business, 2x to 3x annual is reasonable. If they don't want to pay it, you keep it and make more money than had you sold it in the first place.
2-3x annual earnings is not that unsual - I've sold several in that price range.
I have huge organic traffic on a couple of my sites, never pay for traffic. Some of my customers probably pay for half-their traffic so I use the FREE traffic as part of my estimation of the sites actual worth.
Consider buying traffic for 300,000 visitors/month even at the lowest Adword price of $0.05 would cost $18,000/month for that kind of volume if you couldn't get SERPs. Considering how noisy my industry is, and most of the top names in all the SERPs are like me with 5-7 year old well positioned authority sites, and I haven't seen any newcomers in the top 20 for a long time, odds are a newbie won't get anywhere in this segment. Even if they only paid for half the traffic I get, that's still a minimum expense of over $100,000/year.
So I told them to go pound sand, they got no marketshare, and they appear to have closed shop as their site now seems to be dead and so are their phones.
I slipped late last year and sold a site for what I thought it was turns out the guy would have paid 3 times that.
Only money eh!
