Buying eBook websites research

**nEquity** · January 15th, 2010, 07:42 AM

Hi All,

Just wanted to put up some research i did into buying websites that are selling eBooks.

Research is here: http://www.nequityonline.com/reports...teresearch.pdf

It basically seeked to find out what kind of multiples of earnings eBook sites are being sold at. As for me often ebooks dont have a long lifespan as the topic becomes old and stale, or the books become common public knowledge after time and illegal copies etc.

This research confirmed the theory using a comparables transactions technique. It is a commonly accepted technique of pricing. Ive used it frequently in my work for a big 4 accounting firm. Basically it starts off with a database of transactions and screens them down until you get a set of comparable transactions, then a range is found for these transactions. In this case the median was 2.5 times earnings.

I took past transactions in ebook sites made on flippa.com . I think the research is pretty especially since all sites had a monthly PE of under 2.92 except for one outlier.

So anyone in the market for buying one of these types of sites, or selling keep this in mind.

Also I'd like thoughts form some of you experienced guys on this. Of course this is general and there will always be exceptions. Particularly ebook store sites which can and do constantly update with new ebook material and some other sustainable ebooks.

Look forward to hearing comments!

**Michelle** · January 16th, 2010, 11:37 PM

Can you add links to all the auctions please.

**Clinton** · January 18th, 2010, 04:27 AM

nEquity, what did you use as the profit figure in your calculations - the gross profit claimed by the seller?

**benitez17** · January 18th, 2010, 06:09 AM

Has anyone been able to read the report? It crashed my browser (Firefox) twice when I tried to view it.

**nEquity** · January 18th, 2010, 06:35 AM

We went through the listings and tried to determine the net profit as best we could. If the details were too 'murky' they were omitted

**Clinton** · January 18th, 2010, 06:47 AM

benetiz17, it's working for me in FF and Foxit (I don't use Acrobat because it's so bloated and so prone to security flaws. There's a new patch for Adobe users last week as a result of a serious security threat)

**hooperman** · January 18th, 2010, 06:52 AM

The first site mentioned (flipwebsitesforbucks) sold for a BIN of $797 and claimed no profit, but your report says $1,500 and $2,080 respectively (maybe I'm looking in the wrong place). The other sites I found of Flippa didn't have a long history of earning revenue. Obviously, they're going to attract lower bids than those sites with longer histories. I don't think you can come to any meaningful conclusions based on the fact that your report doesn't take into account length of earnings history, plus the fact that it's impossible to tell what profit each site really made. In the few auctions I checked, the sellers seemed to think that all money coming in was profit.

**nEquity** · January 18th, 2010, 08:07 AM

Its funny how people always try to pick things apart here to make others look bad. Forum wont last based on this... anyway in response

Maybe it sold again since this research was conducted (flipwebsitesforbucks), as these listings were off the original market place. Obviously we could not do full due diligence and just relied on the claims in the ad.
Secondly, yes thats the point ebook sites generally dont hav elong earnings of revenue, did because ebooks arent fresh for long, did you not even read the report?
Lastly, Yes its impossible to tell what profit the site really made, but it is based on the info the seller provided before making the purchase, so its the same as the buyer would be thinking is earned, I dont see your point here.

Please get the facts straight and think about what you right first before trying to think you are the all insightful website sleling guru.

**Clinton** · January 18th, 2010, 08:17 AM

nEquity, by having a signature stating that you provide advisory services you are setting a high bar. People would expect you to be very experienced in areas you claim to provide advisory services on. And they wouldn't expect rookie errors. If there's a flaw in the reasoning or the maths they would point it out. Any good professional in the field would then look at whether he did indeed make a mistake and recognise the flaw in his logic or provide his defence of his research.

I don't think you can come to any meaningful conclusions based on the fact that your report doesn't take into account length of earnings history, plus the fact that it's impossible to tell what profit each site really made.

I think hooperman is claiming that if you can't tell what the profit is then you can't calculate the multiple it sold for (bearing in mind that the headline profit figure rarely matches the real profit and in ease case the buyer has done his DD and his own calculations to arrive at the profit figure). Does that not sound logical to you?

**tke71709** · January 18th, 2010, 08:24 AM

Originally Posted by nEquity

Its funny how people always try to pick things apart here to make others look bad. Forum wont last based on this... anyway in response

We're trying to put together a forum that holds it's users to a higher standard of discussion that means that you (or anyone) may be questioned on your methodology/statements.

PeterTDavis tore a strip off me for one of my posts, did you see me get all defensive and suggest that comments like that would be the end of the forum? If we can't be honest with one another, and question things then this place is going to quickly become just another webmaster cesspool with no value added.