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Thread: Some Questions About Selling A Network Of Forums

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    Some Questions About Selling A Network Of Forums

    Hi all,

    I've read through several of the FAQs and posts on the site but still had some answered questions about a network of tech forums I have that I'm looking to sell. There's about 20 of the forums in all, with each focused on a specific device, for instance Nexus7Forum (dot com), Nexus6Forum (dot com) etc. You can see a list of the others at the bottom of the page of each forum. Now, I get about 200k-300k page views each month and earnings from adsense and affiliate/Viglink of about $800-$1400 depending on the month.

    My main question really is this. I've had several companies approach me to become sponsors and I think the potential earnings of these forums is much greater than it is making now if I went and got paid sponsors for many of the sites on a monthly basis for banner ads and possibly posting articles about sponsor's products, etc. How do I figure this into the price? Will potential buyers figure in the potential increased earnings from someone that knows how to either work with a media buyer or get paid banner ads for the forums or do I have to get the sponsors before I sell the sites in order to prove the value?

    Another question has to do with the social media following. There's about 12,000 Facebook/Google+/Twitter followers that I sometimes send device specials/sales to as well as the usual news articles I write to these followers. The sales or specials typically have an affiliate link in it. Is this social media following valued in a certain way along with the websites? Eash site has it's own Facebook/Google+ and Twitter pages. A total of 60 pages in all.

    Thanks in advance for your help.

    BFM

    oops, above should read 'unanswered questions' and Nexus5forum (dot com), not Nexus6forum.
    Last edited by Kay; 30 January 2014 at 10:05 pm. Reason: To merge posts

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  3. #2
    aka "meathead1234" Thomas is a Premium Member
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    Buyers don't care about "potential". If you had a signed contract from an advertiser/an advertiser who had pre-paid, that would be different.

    If you think you can make more with paid sponsorship, then do that before the sale. Don't do what most people do and sell a year of advertising in advance taking up all your spots, though (you revenue will seem higher but in reality you've killed any earning potential for the new owner and usually have to rebate payments on a pro-rata basis).

    Site value is mainly a function of revenue/net income and not of potential/social following. Having a strong social presence will definitely help with the sale, especially if it means you have a range of traffic sources. The main issue I foresee with your sites is trademark concerns - using words like "nexus" in your domain is likely going to be problematical if the trademark holder decides to come after you. You may have got away with it so far, but that won't be much security for a buyer. In many cases, product related support forums can be quite safe from trademark claims - but that's more my experience rather than the law. In an ideal world, you would get written permission from the trademark holder before selling - this would make a HUGE difference in sales price. I would expect value would be around half if you don't have permission/all your domains are potential infringements.

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    I agree with Thomas regarding the "potential" of having paid sponsors on a forum. I buy forums regularly, and more often than not I find that the seller wants me to pay for things like the time they put into building the forum, and they want me to value the forum based on what it would be worth if I spent the next few years working full time on it because it has such potential. Thing is, with forums, a brand new domain name and a forum software license has as much potential as anything else. What has value in a forum is what the forum is today.

    Another thing you should know is that one single forum on a timeless topic with the activity, traffic and revenue stats that you describe would have much more value than those same numbers spread across 20 forums on ephemeral topics. The problem with making a forum on topics like the Nexus 7 is that in a year or two nobody is going to care about it. It's highly unlikely that anyone is going to want to invest heavily in buying a site on such a topic. You might be better off merging your 20 forums into one (assuming they're all on different mobile devices), as the long-term value of a forum generally about mobile devices is much higher than a forum on a single device model. Problem is, you might just end up losing all your traffic if you do that.

    On the other hand, I wouldn't worry so much about the trademark concerns that Thomas mentions. I'd venture to guess that over 50% of the active forums out there incorporate someone else's trademark in one form or another, including in the domain. You can even find Disney forums out there, with disney in the name, or other Disney related trademarked words, and nobody is more hyper-vigilant about trademark concerns than they are, yet there are some truly huge disney forums. Every model of car has a forum using its name, as do most other products that people care about. I have yet to hear anyone in the forum business who I know of that buys forums (and I know a lot of them) who would do more than ask if you've ever been contacted about the trademark and if you can honestly answer no on that question then I wouldn't give it a second thought.

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    Thanks for the comments guys. I'm not too concerned about the trademark issues as I've had a lot of experience with mobile device forums and companies actually look at us as a good part of their ecosystem since we're basically providing free tech support. Companies like Forum Foundry and Verticalscope have hundreds of device sites with no issues. The only time a trademark holder tends to come after a site is if the site is unfairly badmouthing a product or doing something illegal or unethical like pretending to be a part of Apple and using an Apple trademark domain to sell their goods. As long as you're a legit forum/message board they don't care and in fact can actually be supportive. ( I can give examples of this last comment in private)

    Now as far as consolidating the forums into one site, I've considered this or possibly having one master site that then links out to all the separate forums. I might revisit this idea. What I've been trying to do is concentrate on the forums where the name is now branded long term and are multiple generations of products instead of just one off. So for instance the Nexus 7 is already in its second generation and most assume this will be an ongoing thing...they will continue to call it Nexus 7 but just 2nd generation, 3rd generation, etc. That should help maintain the value. Of course this doesn't apply to all forums, but as in many industries, now that mobile devices are maturing as a product group, many companies have decided on long-term brands rather than changing them every year. Thus why we have a Galaxy S 3, 4, etc, iPad 1, 2, 3...etc. This seems to be how the industry is trending...long term brands they are keeping. We'll probably see a 7th, 8th and 9th generation iPad and Galaxy S one day similar to how we have Mustang and Honda Accord for decades with the same name. Again...I think this is an industry in the process of maturing and that's when these longer term brands develop. Still, your points are all valid for certain sites.

    There's a lot to think over here though. I'll definitely sign some of these sponsor agreements though...probably keep the term to 6 months. That should bring in an additional $500-$1000/month which will help the final sale price. Again...thanks for your thoughts.

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    On the trademark issue, I agree with you and petertdavis that while it is a theoretical problem, it is not a problem in practice because the forums help boost the visibility of the brands. In the same way, most celebrities don't try to close down their fan sites, even though the celebrities usually have their own page that the fan site is in effect competing against. I have represented a number of clients who have bought and sold sites that were complementary (not complimentary) to trademarked products or services without it killing the deal. Of course, the buyer still needs to do its diligence to make sure that it is not a problem in each particular deal.

    I've moderated a number of forums over the years and I think one of the problems you may face with your structure is getting and keeping good mods. A person is likely not going be active on both a Nexus 7 forum and a Galaxy Note forum, even though many of the questions may be about the Android operating system or Android apps, rather than the particular hardware platform.

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    Thanks David. That's a good point about the Mods. I have about 10 mods right now, most of which are on multiple forums. We sorta have a team intact that takes care of any spam issues and keeps order on the boards. They all do it voluntarily and they each own several devices and enjoy helping others which is why they've volunteered. Typically a Mod would have a tablet, a phone and perhaps another device like the Chromecast which we also have a forum for. I've got a few Mods that are actually on half a dozen or so forums even for devices they don't own, simply because they enjoy helping others and being part of the team. Long Term I'm sure at some point some will move on and it would be the new owner's job to find a replacement from the current membership or by himself. I'm still not exactly sure how to value these things however. What kind of multiple should I ask and is it based solely on income, on traffic or both?

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    In most off-line business transactions, deals are based on income (actually, something called EBITDA). While there are always exceptions, like Internet startups selling for hundreds of millions of dollars before they even reach profitability, income remains the key metric for most deals.

    In another current thread, brainwave posted a link to this infograph/article:

    http://www.digitalexits.com/whats-yo...usiness-worth/

    The article gives average multiples based on a number of different criteria such as revenue model and total sales. Although there are a lot of other factors that come into play (some of which the author identifies as: workload, profitability, USP, age, and risk), the averages do provide some guidance.

    It is difficult to pinpoint a reasonable range of multiple without knowing all the facts, such as the current income, the income history and trends, the amount of time the owner needs to spend working on the forums, etc... However, my guess is that your final multiple will fall in the range of 2 to 3.5 times annual income, and probably less that 3x. By focusing on particular devices, even popular ones, your forums have a finite life. Unlike a forum for Disney vacations or coin collectors, it is unlikely that a forum on a particular device will thrive over an extended period of time. What would a forum on the Palm Treo or a Blackberry Pearl be worth today? I'm guessing that those would fetch a very low multiple, well under 2.

    That's just my two cents worth.

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    Thanks for the reply David. The one point I'd ad is that some device forums, like say one for the ipad, iphone or GalaxyS series that have multiple generations and have become a branded name have more value than a device that is a one time only thing. These forums should gain value since I think most would agree Apple isn't about to change the iPhone name anytime soon and we'll probably see an iPhone 10 one day etc. About half of my device forums fall under this kind of category of what i call 'branded' phones...ones that are multiple generations with the same name. Another I can think of is the Droid brand which has multiple generations and models with the same branded name. Regardless, your estimate of 2-3.5x seems about right. I actually sold a group of forums last year to a larger company and got around 3x earnings for them. I can see there's a lot of wiggle room and a wide range of factors that will come into play. The difference between this time and last is that the company that bought my old forums approached me, while this time I'm going to be soliciting a buyer. I guess I'll just have to do what I've said before and sign as many sponsors up in the next few months as I can and then start approaching buyers or perhaps put the whole network up on Flippa or even here for a 3x multiple or so and see how the reception is. I'm forecasting earnings to be around 2k/mo so 24k/year. A 3x multiple would be roughly the 72k area although due to some of the mitigating factors we've mentioned on this thread I could see myself parting for a bit less.

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    By the way, I wholeheartedly agree that device names that have become brands for whole product lines have more value than those that don't. Some, like iPad and iPhone probably are almost as permanent as the company that produces them. It is hard for me to see Apple changing the name of the iPhone. It's somewhat easier to see Samsung moving on from the Galaxy S series some day, and perhaps coming up with a next generation name across all Galaxy devices, but I also think that is down the road. My point was just that a forum focusing on a particular device, even a particular family of devices, has a somewhat more limited life than one based on Disney vacations or hobbies that have been enjoyed for generations and are likely to continue on for many generations to come.

    In any event, your approach to first boosting the forum income on your own rather than using the potential income as a selling point is smart. Buyers rarely pay the seller for actions that the buyer plans to take after the sale is consummated. The potential for additional income may make the sale more attractive, and make the forum easier to sell, but it seldom translates into additional dollars (or euros or pesos) at the closing.

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