Value of a online business

Methos · Jan 15, 2007

I've tried searching the web to get an idea of how online businesses might be valued, but had no luck finding any answers.

Is there a rough formula for, say, an online business run from home, relocatable, that requires x hours work per week, turns over y thousand per year generating a profit of z thousand ?

Unless I'm looking in the wrong places, there don't seem to be very many for sale !

Thanks

Richie N · Jan 15, 2007

There was a posting about this yesterday or the day before, basically a company is worth what someone is willing to pay for it!

Methos · Jan 15, 2007

Sorry, missed that one. I'll try and find it ...

Richie N · Jan 15, 2007

one of the accountants did post a link about valuation but its very hard to go by so you are best contacting someone who values companies.

aaacbc · Jan 15, 2007

I think the biggest part of the value must be determined through the revenues that the business generates, consider a multiple of the revenus. Another aspect will be also the notority of the business in the web (ranking, etc...)

I think the price must be determined 80% revenu 20% notority

KR

M.

RedSofa · Jan 16, 2007

One of the most common ways to value a business is using the P/E ratio(Price/Earnings). This is used when companies have an easily identifiable share value.

As your business will not have such an easily identifiable share value you could say that this is irrelevant, however this can be used as a benchmark.

Look at quoted companies in your industry and research the P/E ratio for that industry, use this (sensibly) with the retained (sustainable) profits of your business and this could provide a 'good indication' of what your business may be worth to the right buyer.

Beauty (or value in this case) is always in the eye of the beholder.

peterjhale · Jan 16, 2007

from the website sales forums it seems to be about 10 x monthly revenues (assuming these revenues are basically profits) - and of course it's only worth what someone is prepared to pay, but the 10 x is a starting point.

Methos · Jan 16, 2007

Thanks for your thoughts

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