Forum Moderators: LifeinAsia
* 1,500,000 uniques per month
* 20-25 million page views per month
* $30,000+ revenue per month
* 2 years old but very established.
* Nov 06 looks to be the best month yet.
What other information do you need to make an evaluation?
Thanks!
Oh and welcome to Webmasterworld - currently the best (IMHO) PUBLIC forum for Adsense Publishers.
Are you buying or selling?
[edited by: Pengi at 3:50 pm (utc) on Nov. 26, 2006]
How is the traffic obtained - SERPS/Organic or PPC?
- Its almost 100% organic traffic.
What is the reason for selling?
- I was approached by a company who has a similar site but with a slightly different approach. It would be some kind of fusion of the sites.
What is the niche?
- Online video entertainment (streaming)
Is anything "happening" that could be expected to significantly change the traffic?
- The traffic is expected to increase over the coming 6 months.
Is the revenue (presumably adsense) transferable to a new owner?
- Yes, all revenue is transferable.
I am the seller.
[edited by: Amoas at 3:57 pm (utc) on Nov. 26, 2006]
[google.com...]
Opinions vary of course - it's only worth what the buter is prepared to pay, but it sounds to me that an appropraite figure could be in the order of £100k to £300k.
would you have to agree not to start again with a new site in the same niche ;) maybe that would be worth some more!
1) If my bank says their interest rate is 4% a year, I know I can trust their numbers. And I don't know if I can trust the numbers you gave me about that website. Of course I can do some research but I don't like the fact that I need to do that. Deng! 50% off, resulting in $4.500.000.
2) I know that the 4% the bank will pay me is sustainable. How about the $ 30.000 a month that your website makes? How do I know that won't be only $10.000 a month within a year from now? Deng! 50% off, resulting in $2.250.000.
3) If I bring my money to the bank, I just have to sit back and relax. If I buy your website I have to work to keep it going. Perhaps I need to hire staff to run it for me. Deng! 50% off, resulting in $1.125.000.
4) My bank is a huge and very stable multinational. Your website is just a little one man show. If the webmaster catches a cold, the site will be out of order. Deng! 50% off, resulting in $562.500.
5) We didn't ask for your website, you want to sell it. Deng! Eh... 36% off! Resulting in $360.000. That's one years profit. And that's not extremely bad for this business.
If I were to sell a website I think I would try to convince potential buyers that my website:
- Has very solid numbers that are confirmed by an accountant
- Is a very secure investment with little risks involved
- Has a strong growth potential
- Doesn't require a lot of work, the money will poor in automatically
- Is something they really want. They are lucky to have the chance of buying it!
This one doesn`t apply since they aproached him, so we`re back one step. A nice figure by any means ..
If they want to buy and you're reluctant, that does poof +100% at least. Take a look at YouTube for inspiration. $1.65 billion ... Now you're smaller than they were, but if you have a niche you have an interested buyer in, they might want to give much more than 1 time the yearly revenue, but a lot depends on the profit/loss and potential for profit.
I make that $360K
Zygoot: That is revenue. The profit per year is around $150,000 after server costs/salaries/taxes (huge european taxes) etc.
humblebeginnings:
You have some good pointers there but I think I can rules some of the "off" out :)
1. and 2. Its true it is not "money in the bank" but the site has very good potential to increase the ad revenues (which today is only adsense). A couple of well thought of CPM campaigns should be able to increase the ~$0.30 CPM (per ad spot) which Google gives to something better.
3. This is a valid point, after expenses there will be about 50% left.
4. The site has a staff of around 5 full time admins and 10 more spare time moderators/admins. It is not a one man show.
5. I was approached by the company as rigi pointed out.
- Solid numbers? - All numbers can be confirmed. The site is operated by a real company.
- Secure investment? I would consider it to be low/medium risk but it is not up to me to evaluate. :)
- Strong growth potential? - During 2007/2008 the site have a really good potential for growth.
- Require a lot of work? - The site brings in money automatically but if they want to bring it to the next level and stay on top it will have to be developed through the coming years ofc.
- Something they really want? - The buying company has a similar site but with a slightly different approach. My site would bring a whole new dynamic to their network.
How would you value of the site with this new information?
swa66: The reason for selling would be that I do not think I can take the site much further without strong partners with good business contacts and finances.
Their current offer is (first):
$500,000 in cash
$150,000 yearly for 3 years (Work contract)
10% shares in a company said to be valued $8-$10 million which makes about $800,000 today. But I would consider this high risk shares.
What is your take on this offer? Am I played for a fool or is it reasonable?
Thank you.
[edited by: Amoas at 10:46 pm (utc) on Nov. 26, 2006]
bien venue à WebmasterWorld ..
you know how to pitch and research at the same time ;-)
chapeau ..:)
Lets say that there's another company in about the same position with these exceptions:
A) No one has approached the seller yet, but the reasons for selling are the same. Company is going to need experienced Executive leadership to grow much more than where its at
B) Its traffic comes mostly from PPC and not organic, though it is changing
C) it is a retail site, so no actual technology for sale, simply the customer base and recurrign revenue
D) company is young (i.e. 18 months old) and has seen growth to approx 40K per month (about 10K in profit) currently. '07 estiamted revenue is 500K with 20-25% profit margin.
Obviously some differences, but could this company expect to get 2 times annual profit? more? What can be done to drive the resale value up?
It seems there's not much following or reputation as added value.
I might be wrong, just $.02 worth of impressions.
I want to hear what swa66, humblebeginnings and pengi has to say about this as well considering their earlier input.
I have heard someone who talked about $5,000/20 000 monthly page views for site. Is that just crazy talk? That would make $5,000,000 in this case.
Another popular "forumla" is to take the sites annual revenue and multiply by between 8 and 15. That would make between $1,150,000 - $2,150,000.
Wouldnt it be stupid to take their first offer?
I personally think that the offer you received was an excellent one... take the money and run!
For example:
[webmasterworld.com...]
" As with how much, I know in the states a good rule is 5-7 years worth..."
" >I do think 10 years worth is too much
I don't. I think 10x profit is the perfect number. For you somewhere between $500K and $900K. "
and:
[webmasterworld.com...]
"But as has been said it can be a VERY rough estimate to say between 5-10 years of net prof. "
I agree that the page view formula would be inaccurate in most cases though.
Although it all depends on the age of the site in question, I still think it would be quite unlikely to receive 10x annual earnings. That's the figure that bricks and mortar companies are generally sold for!
In the end, the worth of the business is whatever someone will pay for it. If you can get a higher price elsewhere, then I would go for it! If, however, the monthly income is more valuable to you than a lump sum payment, then don't sell the website.
Take the cash and have some fun. You will be able to start another profitable site again ;)
Amoas - Sorry for the hijack, but i figured it was related so might be of use to others reading the thread
Google bought it for a bit more than that I think...
Welcome to WW!
They are offering you cash at about 3.3 x net annual profit. I assume physical assets are not large in your case?
That is not a bad offer, for a starter, and in cash! It shows that they are serious at least :) Which is what I would assume they intended to achieve.
10 x annual net profit + physical asset value is the old workhorse for bricks and mortar companies. The Internet is harder to price. Google is currently at about 60x (has been much higher), Microsoft has been in the mid 20x range for many years and Yahoo is somewhere in between.
The older they are, the less speculation is involved and generally the resultant P/E drops to more traditional levels of bricks and mortar companies.
There is still a lot of relatively safe growth in Goog, Yhoo, and MSFT built into the P/E (forward P/E), there could be a lot more, or a lot less, in a relatively young and much smaller company.
If I was the buyer I would probably make a $500K offer expecting you to counter at $1 million and settle for $750K.....No logical numbers in that.....just negotiating experience :)
Your site is worth what someone is willing to pay for it. Obviously more than $500K (first offer is never the best), whether it is $501K or $millions only you can really answer ;)
I sold a site a month ago for twice the original offer price, but, the domain was highly desired by the buyer. Often "ego" gets to play a role in these deals and putting a number on that is more intuition than mathematics!
Let us know how much you sell for in the end :)
Welcome to WW!
They are offering you cash at about 3.3 x net annual profit. I assume physical assets are not large in your case?
That is not a bad offer, for a starter, and in cash! It shows that they are serious at least :) Which is what I would assume they intended to achieve.
10 x annual net profit + physical asset value is the old workhorse for bricks and mortar companies. The Internet is harder to price. Google is currently at about 60x (has been much higher), Microsoft has been in the mid 20x range for many years and Yahoo is somewhere in between.
The older they are, the less speculation is involved and generally the resultant P/E drops to more traditional levels of bricks and mortar companies.
There is still a lot of relatively safe growth in Goog, Yhoo, and MSFT built into the P/E (forward P/E), there could be a lot more, or a lot less, in a relatively young and much smaller company.
If I was the buyer I would probably make a $500K offer expecting you to counter at $1 million and settle for $750K.....No logical numbers in that.....just negotiating experience :)
Your site is worth what someone is willing to pay for it. Obviously more than $500K (first offer is never the best), whether it is $501K or $millions only you can really answer ;)
I sold a site a month ago for twice the original offer price, but, the domain was highly desired by the buyer. Often "ego" gets to play a role in these deals and putting a number on that is more intuition than mathematics!
Let us know how much you sell for in the end :)
[edited by: Edge at 1:31 pm (utc) on Nov. 28, 2006]
As with how much, I know in the states a good rule is 5-7 years worth ... I think 10x profit is the perfect number. ... between 5-10 years of net prof.
Bravo, you've done well to bypass all the sensible discussions on this entire site and pick those few stray comments (with hyped up valuations) from people who likely have never sold an online business ever.
Amoas, with that level of smarts I've no doubt you'll get $1,000,000 in cash. And 20% of their shares.
Another popular "forumla" is to take the sites annual revenue and multiply by between 8 and 15
What's the reason for all this hype? Are you pointing your interested buyers to this thread by any chance?
Welcome to WW. I don't know what your game is but, good luck.
If your site is two years old and its in a market where you can safely earn 20-30k/month without too much risk, you should be aiming for a 16x-26x figure. It takes time and effort to find a buyer that will see the value of your site.
A majority of the sites that are on sale nowadays are on sale because they were made to be sold at the height of their profitability with no outlook for the future. If this is the case with you, then you can heed the advice in this thread.
If it is a site that is an actual business with a proven track record, you should sell it like you would any other business and not be phazed by the measly prices sites are being sold for nowadays.
I can tell you where 10 x net annual profit + physical asset value comes from.....About 75% of books based upon Business Economics and most schools that teach the subject (at least they taught that theory 20+ years ago).
10x simply comes from an equation of whether your money will do better in a bank or business over the long-run. It's been a while since we saw bank investment rates at 10x, so IMHO I would say it still applies to a degree.
It isn't plucked from thin air....it is/was the "ball-park" theoretical standard. As such, caveats also apply in certain situations.
I haven't read or heard of a better professionally accepted "general" method more recently. That is not to say there isn't one, and I would certainly appreciate some pointers to newer reference works on this subject that are not considered too "off center" or extreme. Anyone know of any?
>hype
The Internet is about "hype", so 10x net isn't hype. 400+x is hype, and tens of millions of people have purchased net properties, and stocks in them, valued at such!
Future growth is more predicable for bricks and mortar with a relatively long history. It's hard to find a net company with as much as a 10 year history! Future growth is always a gamble....but, that probably means the 10x theory is conservative.....not a hyped up valuation.
Many people who own potentially very valuable net properties might be tempted to sell for a low-ball figure. IMHO that would be a mistake, but, personal economics comes into play, and a lot of folks might sell their Granny for a million bucks when under financial pressure. ;)
History shows us that many people have already sold properties and businesses too many times to big players at less than true market value.
A bird in the hand is not always better than 2 in the bush!
