Valuing a website
Discussion
Hello Everyone,
Just asking for a bit of guidance on this. A friend of mine has now gone into permanent employment but has a popular website with a following and provided her a decent 40K ish p.a. living.
It's a bit niche - high end, country type folks with money if you get my drift. Problem is, how do you value such a site because, other than the website, the good will and contacts with the LTD company underneath, that's it.
The offers so far have been a bit comedy but no real discussions have taken place as yet because "how do you do such a thing". I mean does the whole 3 * gross still hold true in the electronic world?
Just asking for a bit of guidance on this. A friend of mine has now gone into permanent employment but has a popular website with a following and provided her a decent 40K ish p.a. living.
It's a bit niche - high end, country type folks with money if you get my drift. Problem is, how do you value such a site because, other than the website, the good will and contacts with the LTD company underneath, that's it.
The offers so far have been a bit comedy but no real discussions have taken place as yet because "how do you do such a thing". I mean does the whole 3 * gross still hold true in the electronic world?
Much more focus on profit these days than simple revenue.
£40k pa suggests a lifestyle business where you’d be looking for someone to simply step in and run it in her place. Unless there’s significant potential the offers might be unexciting.
£40k pa suggests a lifestyle business where you’d be looking for someone to simply step in and run it in her place. Unless there’s significant potential the offers might be unexciting.
Edited by PetrolTed on Sunday 24th September 22:58
Simpo Two said:
Surely the website would go with the rest of the business; it's just a part of it, the front end.
Sounds like the website is the entire business - it's not the front end to some other activity. Maybe an affiliate or subscription site. In terms of value key question is how much time does it take to run? If it can be done with minimal time then I'd suggest 3x profit. Obviously if running it is a full time endeavour then much less. £40k profit isn't much use if you have to pay somebody £30k to run it. Might still be value there but not much.
Going by the 3x valuation anyone in position to pay £120k for a website is going to be an experienced web person/company with significant skill/resource so if you show the site to such a buyer he might think I could replicate that for less than £120k so we'd also look at value in the business - strong domain name, strong Google rankings, decent email database, where is the traffic coming from, scope for growth etc. Something that can't be replicated.
Impossible to answer without more information which presumably the OP isn't able/willing to disclose. Maybe best option would be to keep the site and run it alongside her job?
Edited by jonsp on Monday 25th September 05:46
How is she making 40K a year a through a website? Selling stuff? Subscriptions? Directly-sold advertising? Advert impressions? Advert click-throughs? Affiliate marketing?
Have you seen evidence of that income? High-net worth audience tends to mean low volume meaning many of the above routes won’t generate much income. And HNW individuals can be tighter with their money than the mass market, so hard to actually make money from through just a web presence
Have you seen evidence of that income? High-net worth audience tends to mean low volume meaning many of the above routes won’t generate much income. And HNW individuals can be tighter with their money than the mass market, so hard to actually make money from through just a web presence
Hey Everyone,
Thanks for the replies. I can't really divulge it because it's not really my business. She was just asking for an idea "As the IT guy she knows". So as people alluded to, it is a single lady with a well established with the website and the LTD company exists just as the vehicle to be in business.
The comedy offers.. £8,500.
I think (and as others have said) she may as well just keep it. It would take about two hours work a day I suspect to keep it moving forward but the reason she was looking for a sale was to allow her to get a lump sum for a mortgage as she wants to get on the housing ladder and would gladly accept a lump sum today rather than a constant drip of cash.
It's also one of those businesses you'd have to be on the inside of the niche to be able to do it, so limited sale potential to "we buy your website".
I guess we will see.
Thanks for the replies. I can't really divulge it because it's not really my business. She was just asking for an idea "As the IT guy she knows". So as people alluded to, it is a single lady with a well established with the website and the LTD company exists just as the vehicle to be in business.
The comedy offers.. £8,500.
I think (and as others have said) she may as well just keep it. It would take about two hours work a day I suspect to keep it moving forward but the reason she was looking for a sale was to allow her to get a lump sum for a mortgage as she wants to get on the housing ladder and would gladly accept a lump sum today rather than a constant drip of cash.
It's also one of those businesses you'd have to be on the inside of the niche to be able to do it, so limited sale potential to "we buy your website".
I guess we will see.
For what it’s worth, I sold an established web site with a similar proven high net worth user base for a not dissimilar amount to a VC. Part of their reasoning was that they would want to redevelop the application behind the site using an open-source database rather than the enterprise cloud software that I was familiar with. Effectively buying the user base rather than the app as it had been developed. And I got back the time and expense that it had been taking to maintain a high-availability web application
Could list it on: https://acquire.com/
I couldn’t comment on value without knowing more to be honest.
I couldn’t comment on value without knowing more to be honest.
CoffeeGuy said:
get a lump sum for a mortgage as she wants to get on the housing ladder and would gladly accept a lump sum today rather than a constant drip of cash.
Makes sense but assuming the income from the website is consistent and provable (ie accounts from her ltd company) this would count toward a mortgage. £40k provable income from the website + (presumably) more than £40k from her new job would put her in a position to get on the ladder. I'd be willing to bet there's mortgage brokers right here who'd love to help her based on those figures.Based on what you've said on paper the website should be worth ~£100k but chances of finding somebody willing/able to write that cheque might be low. So better to keep the site and do the 2 hours/day work?
To me, it sounds like more of a job than a business at the moment. Two things to think about:-
1) If someone wanted to replicate her business, how much would it cost for them to set up?
2) Could she grow the business? Could she take it to, say £250k/year? Or realistically is the opportunity quite niche/small?
These factors will affect the valuation. Realistically, it's not going to be a big lump sum for a small business like this.
1) If someone wanted to replicate her business, how much would it cost for them to set up?
2) Could she grow the business? Could she take it to, say £250k/year? Or realistically is the opportunity quite niche/small?
These factors will affect the valuation. Realistically, it's not going to be a big lump sum for a small business like this.
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