Rhetorical Question - If a Website earns X what is its Sale Value

We work to the principle of selling a website at 8 times its annual revenue, which has worked well for many year.

Since the Credit Crunch many investors have tried to drop that to 5 years.

Yesterday we were approached about selling one of our sites. However I got the feeling that when I quoted the price tag they were somewhat thrown by it.

Obviously they could have been time wasters, chancers or simply delusional. Perhaps I am the one being delusional.

One of our sites Turns over around £35k per year in advertising revenue, this does not include sundry revenue that we take in for text links, media partnerships or adsense revenue.

It has for the past 2 years now had 100% rebook rate from advertisers, who, bearing in mind approached me as I am hopeless on the phone selling myself.

I have created sites and concepts for others who have gone on to sell off the back of it to earn around £150k in advertising with only 4 short campaigns over the year.

For commercial reasons I am not going to post the domain or market on here.

The price I quoted was £1/4 million, a price less than what SEDO was marketing just the domain at 2 years ago.

Am I crazy to lower the price considering that its a hugely emerging market that has not even started to peak. A market estimated to be worth trillions globally till 2025 at the very least.

Oh and the site has been quoted in:
Wall Street Journal, Discovery Channel, TIME, ABC, BBC and well too many other outlets to mention.

Its a news and information site that has fresh unique professionally written daily content.. I know it has potential, but time and location has prevented me from expanding. With a couple more editors and sales staff I know it could be.

Currently its keywords have an Avg CPC of £10.26 on Google which is twice that of the year before and appears to be rising almost monthly.

The domain is HIGHLY descriptive of the industry and is the exact term used by all parties including industry, government and consumers alike.

I don't think for one second that I should try to market it for less, in fact I would be more inclined to ask for more. However I maybe to close to all this and taking it personally considering the 5 years I have put into it to build it to what it is today.

Thoughts, comments and slaps welcome.

 

If you are only talking to one party, you should ask for what you think it's worth. That's because if it's only one party, you haven't offered the site to the wider market to get true market value.

Rgds

 

The next Google Panda-like update could kill your business dead*. Buyers are presumably factoring that in as well as taking into account the frankly disastrous economic climate. Even 5x annual revs sounds very generous when you see the kinds of multiples being posted on a lot of webmaster forums.

*one of our sites was getting 200,000-250,000 uniques a month (Google Analytics stats) for many years until Panda, then it dropped to 110,000-125,000 literally overnight and never recovered.

 

Are you saying you have built up a site that had no income, or was for sale on sedo 2 years ago and want less for it after having done so..? Are you asking was it overpriced then or under now?

Not knowing just how, why and what makes advertiser attracted just how unique, leading edge, specific or what the other tld’s or cctlds or plurals , hyphenated, words associated etc number of years trading, accounts, knowing visitor numbers reader /user loyalty etc, How unique specialized content is it. Are the writer’s part of the package? How emerging established is the market? There are so many variables to take into account that makes it near impossible to judge with any sort of accuracy...

The web does have a potential for growth that can outshine conventional forms but as you say yourself you have not totally maximized its potential but just how far away from it are you is something a businesses would look at…? Taking something to the next level can bring very high costs..? Most traditional investors or business would shy away at 8 times its income there are safer and better returns out there atm…

 

I'd be happy with a 4 multiple.

 

I would be happy with a 4 multiple also, but not happy with the Capital Gains on that. I have been running the site since 2006.. Bought it as a premium domain even back then from BuyDomains.

We are top 2 position for the keywords on every major search engine, and never budged last Panda update. This is a news site, not a crappy content site ;-)

I enjoy working on it despite it taken up a good chunk of my day.. I guess I could sell out for less I have had plenty of firm £150k offers (5 this year) which would normally tell me that this is the market price. However I know and they know what is around the corner so it was a great investment, returning over 2000% over cost so far and one agency today just booked a 6 month... I think even were I to get 250k it would be a reluctant sale at that.

Shall mull it over some more I think.. thanks for all comments.. appreciated and noted.

 

I always thougt that the 'income multiplied by x' formula was only good for MFA sites, not for the kind of sites you are talking about. If you're right about the future expansion of the market, you are not the one who should be considering selling it with a discount, but rather the one who can set a pretty high price tag and just wait for the right buyer to come along.

 

You need to go offshore. Vest ownership in that domain with an offshore entitiy and just pay UK tax on the income as a lessee. When/if you sell the domain, enjoy investing the proceeds abroad.

 

Pherhaps you’d be better taking to an accountant tax liabilities etc Can't see any point of thinking of a price if you don’t know what your left with ?

 

Maybe he's already capitalised the asset, in which case my suggestion holds no weight.

 

Have a good accountant that worked wonders back when Parking was at its best.. I considered offshore then, but not sure if you would spend more time and money trying to avoid the inevitable that while capitalism is great there are those who will rape you of your hard work namely HMRC..

I am locating to Germany Next Year, so perhaps that will offer a better return as it appears to be entrepreneur friendly unlike the UK

 

Germany is part of the EU with reciprocal tax agreements. No solace there I'm afraid.

 

Well at least the weather will be better.. so sunshine whilst being screwed.. got to be better than wind rain and CAMERON an his ConDem government.

Viva La Capitalism...

 

I hear you!

 

Which brings me to a sudo-related matter.

What is with all this anti-capitalism, our respective countries were built on the premise, work hard and you will be rewarded.

Now its "OH they are making more money and its not fair" notwithstanding that many of these crusty protesters are unemployed out of work just because its ironic, but truthfully they are lazy b@st@rds with no get up and go...

What difference do they expect to make? shall we all just give up and go back to the dark ages.. oh wait capitalism existed then.

Never before has the common man had an fighting chance to turn lead into gold.. hard work and commitment is not a bad thing and it should be rewarded.

</end rant>

 

It's not a difficult equation:

The harder you work, the quicker you'll get screwed; propping up wars that are no concern of ours, helping the welfare state, and paying for the Immigration Service that has just been exposed. The list is endless.

I don't wonder why I'm in China.

 

Yes.. but those who choose to be out of work because they think its ironic, to only demonstrate about others with more money, whilst accepting the handouts made possible by those Capitalist -- now that is irony.

What alternative is their to capitalism, and dont all say Star Trek ;-)

 

Capitalism works. Just depends where you live and decide who's going to give you the shaft. Non-payment of taxes in China can (in some circumstances) carry the death penalty

 

Yes capitalism works wonderfully…..? for example tobacco industry the growers, manufactures, distributors, wholesalers and retailers all make the happy profit…

There is the down side of most of the countries its grown using up land that could be used to feed there people, healthcare cost and the misery and pain it causes to those affected by its side effects... But hey ho winers and losers Capitalism working at its best...?

 

What about heroin in Afghanistan? You're starting a debate that potentially needs Great Whites to feed it, not Sticklebacks.

No inference to you intended or implied - I'm just saying this is a huge subject.