How to value a E-Business

[Mwebb]

I am interested to know how you would value an internet business. I am not trying to price one in particular, but was wondering just how values are attributed to them. For example sites that sell for Millions...why?

What do you need to take into account other then the below.

Site traffic [[ What if it all comes from PPC? Or majoritively. If that PPC is not maintaned then the site traffic falls dramatically-would that effect the value...where the traffic comes from]]
Site brand-Brand name
Customer base
Actual turnover- But then sites that make no money as they provide a free service go for shed loads. Skype as an example, made relatively low turnover, but ebay brought for £540M
Mailing list size
Potential for future revenues

And would you take into account any of the custom software you would be purchasing. For example JustCarsOnline is all custom coded. So you would be buying rights to the software that has been developed for us.

What are your thoughts on this. Be interesting to know just how it would work.

Obviously to sell it always comes down to what someone is willing to pay.

Michael

 

[bwglaw]

Have a look at http://www.sedo.co.uk if there are any tips on there.

Jonathan

 

[robertt]

Internet businesses are usually valued in normal ways to 'offline' companies - with dotcom bubble style purchases the exception (and I am sure there are plenty of offline examples of that mentality as well!).

As for domains / more basic sites generally it is $monthlyrevenue x $months .

The $months depends on the name / type of site. eg. typo of a common site will be seen as higher risk than a defendable word.

Likewise single generic domains can hold intrinsic value themselves so are valued on that alone.

At the Skype/Myspace level it could be seen as buying current/future market share, no real revenues currently but when (if) they do they will have the market cornered.

 

[Mwebb]

Have a look at http://www.sedo.co.uk if there are any tips on there.

Jonathan

I had checked it out before, and it doesnt really give you any idea of what to take into account, and just lets you blindly get on with it.

 

[Yorganic]

I would say like any other business i.e. 3x to 10x annual profits depending on the nature and stability of the market. For most internet only based businesses I would say this would be at the lower end of the sacel i.e. 3x annual profits.

The other factor that can enhance the value of a site is if there is substantial traffic which is not currently being converted into a sale - this is how the likes of Myspace get valued i.e. based on their potential to reach a wide market.

As for domains they are like car number plates - they are only worth what the buyer wants to pay and, good domains are short to come by nowadays.

Yorganic Search Marketing
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