What is a online business worth???
 

What is the general rule of thumb? monthly net income times 2, 3 ??

depends on industy, how old the site is, and also look into on how the sales on the site where generated and if the site sells will these sales still be coming in.

i think the monthly profit it makes x 12 as a year to get the investment back is fair.

If selling the rule of thumb I have seen is sales x 3 to 4 depending on who you are selling too.

x3 ect :eek7 Do people just pull random figures out of thin air for such choices?

Choker is thinking of bailing out?

I don't think so, but I know Choker just from the boards.

2,3 months ?
why not 2,3 years ? :helpme

its monthly income x3.

Probably got an offer to be bought out by GK.:1orglaugh

so please sell me a site that makes $2k per month for $6k :glugglug

When selling a small business the rule-of-thumb is generally
asking price = one years income + 10%

If you have to barter then it's the 10% your willing to play with.

For the 1+10% rule to be justified you should be able to produce
two years of books and the average of the two years is what
you use as the "one year" in 1+10%

It's the owners discretion as to whether or not show books to
potential buyers. You don't want to open them just to anyone
that asks to see them.

3x monthly profit?

If you assume your business is reasonably stable, and you take into account your time needed to maintain that business when calculating the profit, you would have to be pretty stupid to sell it for under 12 months profit...

If it's a solid biz, i'd say 6 to 10 months.

This is an excellent question.

There is a difference in price between selling a single site and selling an adult business.

Free sites like TGPs, MGPs, etc. are seen as commodities. These sites sold individually garner a much lower factoring rate. It is sold at a discounted replacement rate (cost of building a new site from scratch). The source of traffic after the sale is also critical if the free site loses that source. Sale price in this case is based on traffic and revenue without the "network boost."

3-6 times monthly revenue.

Ex: www.tgp.com has 50k a day, one year old, $2000 a month in revenue (steady), $500 a month in expenses. Selling price: $3000-$12,000.

There is a big difference of who buys the site. If Drinking Hard of GTS were to buy the TGP, surely the price could be higher because of the ability to extract greater revenues than little old me.

On the other hand, selling a complete business would generate much higher factoring rates. Choker mentioned that he clears $30,000 a month for a well established business with a stable future. Coker could easily ask $360,000-$720,000 for his network.

1-3 times yearly turn over.

As a public company with favorable stock market image (ex:NOOF) with a few million in assets and stable revenue, a company could generate 5-20 times sales as a purchase price.

NOOF is selling at 17 times net earnings ($150 MM market cap). I assume there are some 20 online adult companies that would qualify with this type of pricings.

Depends on the age and stability of the business. Obviously, if you have 2 businesses, both producing $20k/month, and one is 3 months old, and the other is 12 months old, then the older one is going to be worth more, because it has proven to be stable and consistent.

:2 cents:

So basically everyone has a different idea as to what an online business is worth. Plus many factors would have to go into it.

Like some people said above, 3-6 months income...why not just run it for 3-6 more months?

Btw, Choker is not selling anything.

Yeah I have seen brick and mortar businesses sell for 2-3 years so why not a online business :)

You cannot expect 1yr+ of income as the price. Online biz's are not THAT stable.. what if you get DoS attacked or your server loses all the data?

You can ask 1yr+ income as the price for an offline biz. Online I'd say 6months is the MAX.

Especially if you are in the same business and know that you can jumpstart that business and turn a profit much sooner than the 2-3 years income it has now.

I wouldn't sell for less than a years income

Thank you Giorgio for taking the time to lend some sensibility to this thread.

Read his post closely, kids. It's free education. Then learn the difference between a 'commodity' web business and stable online business with a broad base of tangible products and a sustainable recurring revenue stream that's worthy of generating a real multiple. A business that ceases to become a business after any given Google Dance is *not* worth the same multiple of earnings as a content production or distribution company with real contracts, intellectual property, etc.
<br>

The value of a business is subjective. Essentially, its worth what someone will pay for it. Some people value certain aspects more than others.

Take the stock market for example. 24 hours a day, people are trying to figure out what businesses are worth to someone else. If you are certain a particular stock is undervalued, you may buy it in anticipation that sometime in the future more people will come to that realisation, and then you can sell it for a profit. On the other hand you may over value a particular company (which was obviously happening in 1999) and loose lots of money.

Don't rule out day trading either. Day traders are buying in anticipation that at a later period in time someone will value the stock even more. And perhaps that person to is buying it in hopes that someone will value it even more than they. Do either of these day traders take into account the potential future revenue of the company? Quite possibly not.

While this may not appear to be relavant to buying and selling online businesses, it is. The value of a company may actually be disconnected from its earnings, depending on your ultimate goal for that company/online business.

When buying or selling, take into account other things. How much risk are you taking on? Is it possible that some new law is going to be passed that will kill the profitability of the company?

Personally, I think if your dealing with something like a TGP, you don't want to value the site too far into the future. For example, what would you value the Hun at? 3 months earnings would obviously be a steal. I'm sure there would be tons of people who would buy it for a years worth of earning. How about 5 years or even 10?

So, this post was probably needlessly long. The point is: value is highly subjective. Know anyone who buys/sells lots of businesses? That would probably a good guy to make friends with.

In the online adult industry, there is no established rule to the value of a business. The value of your business is whatever someone is willing to pay for it.

Actually I sold my mainstream company for 4 x last YEAR's revenue. This was back in the crazy days of year 2000 though. And the corporation which bought us went chapter 11 in the meantime. And their executives face serious legal actions from the SEC :1orglaugh

Today, in "our" industry I believe it's very difficult to achieve a fair price for your business. Because ...

1) Most businesses are too small for a serious due-diligence.

2) It's very difficult to verify traffic figures (and that they are not just the result of a short-term ad campaign)

3) The adult industry as a whole is very unstable, and so are it's businesses (remember the new VISA rules :Graucho )

4) People in this industry seem to be unwilling to use the phone. They insist in using ICQ ... this behaviour prevents any serious negociations :321GFY

something like 2 or even up to 5 times

You are thinking too hand to mouth here. A real business online or not has the wherewithal and staying power to survive a glitch or downtime. And, that is my whole point. That type of business is worth much more.

- a single site vis-a-vis a network of sites.

No not at all, I am wanting to buy existing sites. Time to grow some more. Thanks for everyones input. I realize there are unlimited variables involved, but I think a good rule of thumb is 3 to 6 months net is what a online business is worth. At least that is what I am guestimating.

I know someone who sold their site for $1.2 mil

6 months later he was in court because the guy who bought it couldnt get the amount of traffic going to the site and was unhappy

the judge reordered $150,000

he hasnt seen a cent

Would you consider selling your online business for 3 to 6 months net income? Maybe that it what you want to spend on buying someone elses business, but that's not what you would sell one for, especially one that has been around a while and has a stronghold in their field.

it makes all the difference in the world when someone is trying to sell their site compared to someone who isnt trying to sell their site but someone wants to buy it from them.

interesting observation

If you have $10'000 per month in this case you should sell your site at least for $120'000.. But much better $240'000 If the buyer can see long time sales stats..., at least for 1 year.

it depends on the stability of the revenue stream...

We pay up to 3yrs income on certain typein domains - but I wouldn't pay more than 3-6 months for a tgp etc.

I disagree with this strongly. There is so much uncertainty just with the internet as a whole to fork out this much money for any website