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Thread: How to Value a Website or Blog

  1. #41
    aka "meathead1234" Thomas is a Premium Member
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    Quote Originally Posted by EricTheRed View Post
    Awesome Thomas!

    Thanks for the formula. That really helps me have a place to evaluate my sites.

    One question, when you say,"valuation at 2x net profit." Do you mean monthly or yearly. So a site that generates $10k per month is offered at $20k or $240k?

    Eric
    To clarify: I meant yearly net profit. Some people will talk about multiples of monthly profit, so if you prefer that way it would be 24x.

    That framework will give you a reasonable indication of what a site is worth in the current market. I tend to list a little higher than I think it is worth so I have some room to negotiate down - it's rare for someone to offer full asking price.

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    Hi Mark:

    Your use of the word “Synergies” struck a chord with me, as I believe that synergies play a huge role in traditional mergers and acquisitions. I'm a retired entrepreneur and new to selling internet assets, but I do have a background in mergers and acquisitions in the bricks and mortar business world. In those transactions "Synergies" played a significant role in the motivation of buyers in that genre. And therefore automatically affected the amount that buyers would be willing to pay for “Goodwill”.

    Some of those synergies were things like:
    • Buying a company to gain instant market share in a new niche.
    • Buying a company to gain access to existing customer lists to market acquiring company’s products.
    • Buying a company to eliminate an existing competitor.
    • Buying a company to reduce overhead of both companies by eliminating redundancies.
    • Buying a company to satisfy the ego needs of management.
    • Buying a company that is being under managed.
    • Buying a company to gain access to company secrets.
    • Buying a company to resolve reputation management issues.
    • Buying a company to reduce tax liabilities.
    • Buying a company to gain ownership of Trademarks, patents and intellectual property.
    All of these issues would be solid reasons to pay well above the P/E ratios.

    Do any of these motivations drive sales in Internet properties?

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    Clinton (25 January 2014)

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