How much to offer for a site?

Discussion in 'Finance and Traffic' started by Shin Ryoku, Oct 29, 2018.

  1. maksim

    maksim Serial Entrepreneur

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    That may work for a completely dead forum with ZERO revenue... but how the hell can you make an offer on an active forum which is well monetized without knowing the income and expenses?

    I would not take anyone seriously if they just sent me off that email.

    THE ONLY folks who would accept it are those that know their forum makes zilch, is dead, and just want to cash out.

    Active community owners would just laugh it off.

    As far as being on the other side of it, if you do not want to disclose your revenue and expenses, how the heck do you expect to get a realistic offer?
    If you don't want to disclose it, then you will have to settle for a conservative low ball offer.

    Otherwise, disclose and get estimate on multiple. i.e.

    Buyer: I am looking at your forum, interested? revenue? value?
    Seller: Sure... I would need $10k.
    Buyer: Ok, in my budget. How do you value it at $10k?
    Seller: Forum is active, blah blah blah, and generates $2k per year.
    Buyer: Ok, sounds about right but as you know multiples dropped off and there is uncertainty, I would be willing to offer $6k, which is 3x multiple. Sound about right? If so, we can move on to due diligence and verify the numbers and then close the deal.
    Seller: Sure.

    Agree in principle, then provide proof with a signed non-disclosure agreement.

    As long as the numbers check out (financials) the big thing would be to see if the traffic will survive to recoup your dollars and what amount of that revenue will continue in the future.

    If something does not check out, you can always go back and renegotiate the price or simply walk away.

    If the site is dead, then the only value is the traffic from search... and I would look at analytics and apply your expect page revenue multiples to that to come up with your value.
     
  2. Horton

    Horton Aspirant

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    My site pays my bills. If I sold it I would have to get a day job. Day jobs suck, so my site is worth at least 10 x early earnings. I turned down 5x earnings a few years ago. Happy I did it. After taxs, I would have to find a job.
     
  3. maksim

    maksim Serial Entrepreneur

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    First of all, congrats on having the site be able to pay the bills!

    I do question the notion that your site is worth a 10x multiple simply because that is what you think it is worth to you...

    To the buyer, it does not really matter whether you are bored or broke... your site earns X... even if stabilized for growth, it will earn Y.
    When a buyer makes an offer, they base their estimates based on the risk they take and how long until they break even on the money they just sent you. You base your worst case scenario on X, and hope it earns Y.

    In either case, a 5x multiple for a forum is very generous and on par with many publicly traded companies overseas and at the top end of the range for private companies in the united states. There is simply a LOT of risk as to whether or not your forum would survive 5 more years, especially with change in ownership.

    Asking a 10x multiple is just mind blowing... the one exception is... your site is worth a 10x to you... and I may pay it... because I think I can monetize it A LOT better than you can, doubling the income immediately and thus it is a 5x in my mind.

    In February my forum will be 10 years old. About 5 or 6 years ago I had discussions with a few of the groups and got offers in the mid $xx,xxx to low $xxx,xxx range. I passed.

    A few years later, between the burn out and family issues, was kicking myself for passing it up., especially when to most it would be worth low to mid $xx,xxx today.

    Instead, am now working on it again, fortunately the community is quite strong in an evergreen niche and actually growing it into a network. Would I pass $50k or so today? Sure.... but if someone gave me a serious offer of $100k to $150k... (far less than a 10x)... I would be seriously considering it.... and if someone did give me a 10x.... absolutely...
     
  4. Joeychgo

    Joeychgo TAZ Administrator

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    I don't think that was his point... I see what he is saying...

    If you have a site or sites that are producing steady and significant revenue - enough that they are your main source of income ---- Then if you sell, you have to either sell for enough that you can live off the proceeds or you have to get a job to replace the lost income.

    SO if you have a site that makes $100k a year --- and you sell for $500k --- is that enough to live off of for the rest of your life? No... So you have to either get more for the site, or be prepared to get a job.
     
  5. Anton Chigurh

    Anton Chigurh Ultimate Badass

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    Orrrrr build another one up and sell it.
     
  6. Joeychgo

    Joeychgo TAZ Administrator

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    In theory - but not so easy to do, nor so quick.
     
  7. fixer

    fixer I'm In My Prime

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    3 years profit is how much websites sell for
     
  8. maksim

    maksim Serial Entrepreneur

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    Believe me I get his point, and. 5x is still not completely crazy.

    When the poster says 10x... that is what he wants for it... it does not mean that is what the site is worth.

    Beyond that is the very real question... even if you keep the site and don’t sell... there is ZERO guarantee that it will be around in 3 to 5 years. So you cannot say at all that by not selling the site he does not need to find a job.

    In fact, in two to theee years the site May be dead and generate no income.

    So what would you rather have? 5 years of income in a check up front... or the uncertainty of how long that income will last?

    Business people don’t get married to their projects, that is the difference between a hobbyist and an investor. A hobbyist will cling onto the forum till it comes back and smacks the ground.

    Investors will realize when someone is being too generous with their offer and will sell their property and reinvest in other projects.

    When it comes to forums, anyone offering a 5x for a highly monetized site should be taken Very seriously.

    Odds are, any forum is likely to be dead within 5 to 10 years.
     
  9. Anton Chigurh

    Anton Chigurh Ultimate Badass

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    Assume it wasn't easy or quick to build up the one he theoretically sold for 500K. But some of that 500K is pretty good seed money for a kickstart. Big advantage.
     
  10. maksim

    maksim Serial Entrepreneur

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    Exactly. Take $200k for living , $300k buys a lot of good forums to recreate an income.
     
  11. Anton Chigurh

    Anton Chigurh Ultimate Badass

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    Websites sell for what the owner GETS for them. Nothing more nothing less.
     
  12. Anton Chigurh

    Anton Chigurh Ultimate Badass

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    Orrrr to build up and sell off at a nice profit. And then keep doing it.
     
  13. maksim

    maksim Serial Entrepreneur

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    Problem is the building part. Far easier and faster to take a good foundation and grow that then build a brand new community.
     
  14. Horton

    Horton Aspirant

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    So let's just say I make $100,000 a year on my site. Not exactly true but close enough. The other interesting factor is I work 1 to 3 hours a day on it so it's not exactly hard work. If I sold it for as little as five times earnings, after taxes I would have about $300,000. Don't get me wrong $300,000 in the bank would be amazing but nowhere near as good as $100,000 a year every year year after year. (note to self: I need to put in another couple hours a week and actually try to get it up to a hundred thousand a year)

    So the point is the windfall from the sale would have to be overwhelming for me to give up what has basically become an annuity.
     
  15. Joeychgo

    Joeychgo TAZ Administrator

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    and yet all mine are growing year over year.....
     
  16. Horton

    Horton Aspirant

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    My page views are up 6% this year over last. I have grown in terms of page views every year for the last 10 years.
     
  17. fixer

    fixer I'm In My Prime

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    The thread is asking how much to offer for a site, Rule of thumb for internet properties is 3 years profit. I've sold over $100,000 in websites.

    statements like, "it's worth how much someone will pay" does not help anyone here, only further vindicates your lack of usefulness to anyone.
     
  18. maksim

    maksim Serial Entrepreneur

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    Where do you live?

    In either case you need to do apples to apples.

    You cannot say $300k after taxes yet talk about $100k pre taxes... Just because you don't pay.

    Furthermore, If you sold it for $500k, with proper cost accounting your taxes would be nowhere near 40%... more like $400 to $450k after taxes, and far less if you roll it into another property.

    Finally you are making a big assumption... "near as good as $100,000 a year every year year after year."

    Google, new tech, Reddit, anything can happen.

    Or are you saying you are guaranteed $100k forever (fine... 10 years) and it will never go down?

    In my niche... a forum with about 3 million posts and 100k members had a falling out.... within a year, they lost the vast majority of their active members who are now on a competing site.

    Would I sell for 5x? No... but the point of this convo is that you CANNOT speak in certainties that your income will be X 5 years from now just because it is today.

    People tire out, get burned out, etc.
     
  19. maksim

    maksim Serial Entrepreneur

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    Congrats but you perfectly well know your experience and mine are going to be different than for the vast majority of forum owners. You also would not sell for 3x to 5x unless you new the site was declining or niche changing.
     
  20. Anton Chigurh

    Anton Chigurh Ultimate Badass

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    The rule of thumb is a straight-up myth. A site is worth what the owner gets at sale. Period. Maybe you've missed the context. You're basing a site's worth strictly on its profit and thats not only wrong, it's silly.
     
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