Quote:
Originally Posted by celandina
Not really... Its business major 101
Similar to bond or real estate valuations, the value of a business can be expressed as the present value of expected future earnings over the years. Use any calculator to determine the value of your business today based on discounted future cash flows with consideration to "excess compensation" paid to owners, level of risk, and possible adjustments for small size or lack of marketability.
So if you can show that your business has a solid base then:
Now, I have applied the standard growth of the years expectations, but reduced it by 10% per annum for lack of marketability.... There are many calculators, but all will come with the same or similar results...
Of course there are many caveats...most of these formulas presume that the business has its own assets and longevity over the years. In our ( web owners) case that we own an exlusive content... So..if you just recycling other content, you are completely correct not worth a rats ass.   |
That may be the theory that they teach in school. And I'm sure they based it on brick and mortar businesses. The fact is, ONLINE businesses are sold for a few years of revenue, not 10. Everything is worth what they pay for it, and this is the multiple that buyers are willing to pay for online businesses.
Now this information is from online mainstream, and affiliate adult sites. I don't have any information about adult paysites. But I really doubt it that anyone would buy a paysite for 10 years of profits.
The online world changes much faster than brick and mortar, buying a website is not the same as buying a grocery store or an auto shop. Facebook, Twitter, Booking.com appeared roughly 10 years ago. Who knows what it will be like in 2026?
Maybe that calculator would work, if you set the level of risk variable really high. Because it IS really high.