In todays market what's a site worth ? - Page 2 - GoFuckYourself.com

PR_Phil · 02-01-2013, 07:37 AM

you guys are all over the place, seems like a few are mixing up revenues with profits, a few a scorned by poor sales or purchases in the past, and a few seem to understand that it is a tough question without more details.

First you have to look at the traffic, the tour, the join process, the aggressiveness of the billing model, the quality of the members area, you have to make a determination if the site is being run well or not, your valuation has to start with this. It's really simple to say a site is worth approximately 10 to 12 months revenue or 3 years profit, but where is that profit going?

If the site is currently declining in sales, and declining in retention, you have to adjust the monthly revenue or monthly income based on the trend that is going on, if the site is losing 5% revenue every month, you have to take that into account and adjust all the future months in your calculations.

If a site is not being run well and you can tell, you need to look at what you would do differently and what the impact will be because there is a value not only to the opportunity to take over the current model, but to improve it and increase it's value.

If the site is a traffic site, you have to look at how well the site is being monetized, what regions are the traffic from, is there unsold inventory that you could sell better, is the traffic growing or waning, regardless of the growth, what is happening with the metrics, are new customers staying longer, or viewing less than old customers.

Does the business model have inherent legal risks, a history of billing and chargeback issues, are those tied to billing practices, a shitty product, or a niche with inherently high chargebacks, (and some niches do chargeback 4 times as much regardless of quality, and the demographics of the user has a lot to do with that.

As a seller, you can determine a lot of the factors, and you can come up with a reasonable starting point (of coarse most sellers are going to ask 3 times that much because they are ridiculous, and need to pay brokerage fees, and collect enough up front to buy that Ferrari that their business never generated enough ash flow for). You need to start with that realistic valuation, you have to fight back the urge to say "oh, well my business is better it should be worth 4 times" and face reality, everything has the same starting point regardless of how cool you think you are. Considering Bruce has a lot of info on this, we can assume he is right and guess that we are starting at something like 10 months gross revenue, or 2.5 years profit. As the current owner you can then asses the state of your business, realistically. If your revenue has been shrinking, you have to work that into your valuations, if you are loosing 5% a month, each month in the future you are evaluating has to continue this trend, no buying is going to bite on your assumption that things have leveled out, chances are you are flat out lying or not willing to admit the truth. Then after adjusting for your current trends, take a realistic look at how well you have done, how smart your people are compared to your competitors, what opportunities are there for your product that you have never explored, and take that into account as well.

once you have done that you have a realistic view of what your product could potentially be worth to the average buyer. But realistically no one knocking on your door is average, if they were, they wouldn't be knocking on your door. They are more likely above average companies who will analyse the opportunity and make a decision based on reality, or below average companies who will buy based on passion, instinct, desire, or the necessity to bring in new cash flow as other opportunities fail. Oh, there is also the crooked scumbag who will want to purchase whatever they can that comes with credit card holding customers attached so they can rip them off repeatedly, their valuation is completely different though, it is more like X number of active members multiplied by how bad they plan to screw them).

so the below average guy will come in and say I want it, he will automatically assume he can run the site better, and automatically assume things are going to get better for the product under his control, and that the industry is just about to start growing exponentially again. If he makes an offer, he will likely low ball you, but by that point he wants it, so he will negotiate and potentially pay you more than what it is worth. He'll use the metrics to try to devalue the product in your mind, but will have no conviction in what he says because in his mind he is going to make it awesome. These are good buyers for value, but chances are when it fails, they are going to publicly blame you for not delivering what you promised, or for handing over something so fucked it just could not be fixed.

when a good company comes in, they are going to go through their own valuation process, which hopefully has a similar starting point as yours, they are going to adjust for the same things we spoke about already, then they are going to adjust for their own strengths and weaknesses. If they feel you are not monetizing well, they will adjust up for that (not their offer, but their room for negotiating). If they have really good people in house working on similar products, they might adjust up for that as well. If they determine that they are just buying a dying revenue stream but want the members, they will adjust down for the fact that they aren't really going to support the product.

finally they will all need to look at the extras that the product comes with, and these can be anything. Obviously the most common in our industry is content, is there exclusive content, is it new or old, has it been exploited on tubes, dvd's, VOD sites, PPV etc. But there are so many other things that can carry value or damage a product. One example that could go either way is to look at the top affiliates, on one hand half the sales could currently be coming from the guys in our industry that demand $60 per sale for which companies ad multiple cross sales, difficult cancellation processes etc, which we all know will just cause CB problems down the road, or the top affiliate could be a genuine whale who works with programs to do it right, it might be a guy that the buyer has been trying to work with for years without success, and this could be their in with that buying, buy one of the programs or sites they are working with.

I guess the short answer is, it is impossible to really know without studying the company, the site, and the financials; But as a seller, you can make a great determination if you can just put your ego aside and accept the numbers for what they are when you are taking a look at it yourself.

dbruno · 02-01-2013, 08:50 AM

Quote:

Originally Posted by AdultB2B

As someone who does this for a living I will tell you there is no set formula. It used to be 3 to 3.5 times annual profit, but few in our space are getting that anymore.

What it depends on is whether the site or company is still growing, what genre they are in, what kind of upside the concept has and many more variables.

And Richard is absolutely right, it comes down to how much someone is willing to pay.

If your company is trending down, don't expect to get a great ratio.

Also keep in mind that at this moment it is a bit of a buyer's market.

Yes, content comes into it with paysites, but I don't think it's near as important as it used to be. Buyers are sometimes paying a fraction of the value of the content if the site or sites are trending downward and not making money.

The first question I ask a prospective buyer is "are you profitable". Because if you're not, it suddenly becomes a very hard sell.

If you are even thinking of selling and have any questions, please hit me up at bpf at adultsitebroker dot com. I'm always glad to speak to anyone about their company and the best way to potentially move it.

I agree with you Bruce... essentially, although there is no set formula, a lot of it comes down to timing, market positioning and of course marketing.

Kenny B! · 02-01-2013, 09:51 AM

Quote:

Originally Posted by PR_Phil

I guess the short answer is...

You should have started with that

Good post, glad you took the time to answer properly. No way it can be a few line answer, too many factors at play.

ilnjscb · 02-01-2013, 10:05 AM

Mainstream brick and mortar small businesses with good books, taxes paid, domestic banks, years of operation and contracts in place average less than 3x SDE or EBITDA. I very seriously doubt a 3x SDE price is justified for an adult website. 10 months earning reflects that there is a very substantial risk premium unless you own a large similarly themed network and can monetize better than the existing owner.

Be that as it may, the professional sellers play against other players, not against the house. If they can get fool newbies in at that price, I guess they will.

"The value of the small business is mostly determined by the cash flow (or business brokers use the term "Seller's Discretionary Earnings" instead to be more accurate). Seller's Discretionary Earnings (SDE) is defined as net income before taxes (operating income); interest; depreciation and amortization; owners compensation; owners benefits; and non recurring expenses.

Most small businesses sell for 1.5 - 3.5 (multiples) times the yearly SDE, depending upon the value factors of the business. Things that determine the multiple or value factors are the stability of historical earnings; business & industry growth; type of business (service with few assets to manufacturing with significant assets); location & facilities; stability & skill of employees; competition; diversification of products, service & geographical markets; desirability of the business; depth of management; and terms of the sale. The national average is 2.76 times SDE."

Kiwigirl · 02-01-2013, 11:14 AM

Quote:

Originally Posted by woj

What type/size of sites used to sell for 3-3.5 annual profit? Can you name a couple of example sites that could sell for that multiple?

I can verify that back in 2007 the TGP's I co owned were sold for 3 years revenue.
Needless to say the new owners didn't manage the sites as instructed and last year it was noticed that the sites no longer existed.

Dirty D · 02-01-2013, 12:08 PM

I have bought a few revenue sites and programs recently...

JFK, hit me up with what you have.

Anyone selling or want an opinion - please hit me up on ICQ or email.

BareBacked · 02-01-2013, 10:06 PM

Ill buy type in domains with steady NOT declining revenue for 12 months

JFK · 02-01-2013, 11:23 PM

Quote:

Originally Posted by Dirty D

I have bought a few revenue sites and programs recently...

JFK, hit me up with what you have.

Anyone selling or want an opinion - please hit me up on ICQ or email.

Sorry man I was looking to Buy

But as PR_Phil so aptly stated

"But as a seller, you can make a great determination if you can just put your ego aside and accept the numbers for what they are when you are taking a look at it yourself."

They are looking for apx 2 1/2 yrs of revenue, which I didnt see as being appropriate.

baddog · 02-02-2013, 12:19 AM

Quote:

Originally Posted by JFK

They are looking for apx 2 1/2 yrs of revenue, which I didnt see as being appropriate.

The only way it would be is if they have exclusive content and a very large list of emails that are prior members . . . . then maybe.

martinsc · 02-02-2013, 01:31 AM

Quote:

Originally Posted by jmk

02-01-2013, 07:37 AM	#51
PR_Phil Confirmed User Industry Role: Join Date: Apr 2003 Location: knee deep in dirty diapers Posts: 1,960	you guys are all over the place, seems like a few are mixing up revenues with profits, a few a scorned by poor sales or purchases in the past, and a few seem to understand that it is a tough question without more details. First you have to look at the traffic, the tour, the join process, the aggressiveness of the billing model, the quality of the members area, you have to make a determination if the site is being run well or not, your valuation has to start with this. It's really simple to say a site is worth approximately 10 to 12 months revenue or 3 years profit, but where is that profit going? If the site is currently declining in sales, and declining in retention, you have to adjust the monthly revenue or monthly income based on the trend that is going on, if the site is losing 5% revenue every month, you have to take that into account and adjust all the future months in your calculations. If a site is not being run well and you can tell, you need to look at what you would do differently and what the impact will be because there is a value not only to the opportunity to take over the current model, but to improve it and increase it's value. If the site is a traffic site, you have to look at how well the site is being monetized, what regions are the traffic from, is there unsold inventory that you could sell better, is the traffic growing or waning, regardless of the growth, what is happening with the metrics, are new customers staying longer, or viewing less than old customers. Does the business model have inherent legal risks, a history of billing and chargeback issues, are those tied to billing practices, a shitty product, or a niche with inherently high chargebacks, (and some niches do chargeback 4 times as much regardless of quality, and the demographics of the user has a lot to do with that. As a seller, you can determine a lot of the factors, and you can come up with a reasonable starting point (of coarse most sellers are going to ask 3 times that much because they are ridiculous, and need to pay brokerage fees, and collect enough up front to buy that Ferrari that their business never generated enough ash flow for). You need to start with that realistic valuation, you have to fight back the urge to say "oh, well my business is better it should be worth 4 times" and face reality, everything has the same starting point regardless of how cool you think you are. Considering Bruce has a lot of info on this, we can assume he is right and guess that we are starting at something like 10 months gross revenue, or 2.5 years profit. As the current owner you can then asses the state of your business, realistically. If your revenue has been shrinking, you have to work that into your valuations, if you are loosing 5% a month, each month in the future you are evaluating has to continue this trend, no buying is going to bite on your assumption that things have leveled out, chances are you are flat out lying or not willing to admit the truth. Then after adjusting for your current trends, take a realistic look at how well you have done, how smart your people are compared to your competitors, what opportunities are there for your product that you have never explored, and take that into account as well. once you have done that you have a realistic view of what your product could potentially be worth to the average buyer. But realistically no one knocking on your door is average, if they were, they wouldn't be knocking on your door. They are more likely above average companies who will analyse the opportunity and make a decision based on reality, or below average companies who will buy based on passion, instinct, desire, or the necessity to bring in new cash flow as other opportunities fail. Oh, there is also the crooked scumbag who will want to purchase whatever they can that comes with credit card holding customers attached so they can rip them off repeatedly, their valuation is completely different though, it is more like X number of active members multiplied by how bad they plan to screw them). so the below average guy will come in and say I want it, he will automatically assume he can run the site better, and automatically assume things are going to get better for the product under his control, and that the industry is just about to start growing exponentially again. If he makes an offer, he will likely low ball you, but by that point he wants it, so he will negotiate and potentially pay you more than what it is worth. He'll use the metrics to try to devalue the product in your mind, but will have no conviction in what he says because in his mind he is going to make it awesome. These are good buyers for value, but chances are when it fails, they are going to publicly blame you for not delivering what you promised, or for handing over something so fucked it just could not be fixed. when a good company comes in, they are going to go through their own valuation process, which hopefully has a similar starting point as yours, they are going to adjust for the same things we spoke about already, then they are going to adjust for their own strengths and weaknesses. If they feel you are not monetizing well, they will adjust up for that (not their offer, but their room for negotiating). If they have really good people in house working on similar products, they might adjust up for that as well. If they determine that they are just buying a dying revenue stream but want the members, they will adjust down for the fact that they aren't really going to support the product. finally they will all need to look at the extras that the product comes with, and these can be anything. Obviously the most common in our industry is content, is there exclusive content, is it new or old, has it been exploited on tubes, dvd's, VOD sites, PPV etc. But there are so many other things that can carry value or damage a product. One example that could go either way is to look at the top affiliates, on one hand half the sales could currently be coming from the guys in our industry that demand $60 per sale for which companies ad multiple cross sales, difficult cancellation processes etc, which we all know will just cause CB problems down the road, or the top affiliate could be a genuine whale who works with programs to do it right, it might be a guy that the buyer has been trying to work with for years without success, and this could be their in with that buying, buy one of the programs or sites they are working with. I guess the short answer is, it is impossible to really know without studying the company, the site, and the financials; But as a seller, you can make a great determination if you can just put your ego aside and accept the numbers for what they are when you are taking a look at it yourself. __________________

02-01-2013, 12:08 PM	#56
Dirty D Confirmed User Join Date: May 2002 Location: Paying Webmasters Millions Since 1999 Posts: 4,044	I have bought a few revenue sites and programs recently... JFK, hit me up with what you have. Anyone selling or want an opinion - please hit me up on ICQ or email. __________________ Dirty D - ICQ #1326843 - $1 Million Dollars of Bonus Money - 8,000+ FHG! Glory Hole Girlz - Crack Whore Confessions - Tampa Bukkake - Slut Wife Training - Fuck a Fan Electricity Play - Porn Video Drive - Theater Sluts - Skunk Riley - Ukraine Amateurs - Strapon Sessions

02-01-2013, 10:06 PM	#57
BareBacked Confirmed User Join Date: Feb 2007 Location: www.BareBacked.com Posts: 3,685	Ill buy type in domains with steady NOT declining revenue for 12 months __________________ NEW SITE PAYING $30 for a $1 TRIAL Selfies

02-01-2013, 10:05 AM	#54
ilnjscb Confirmed User Industry Role: Join Date: Jun 2009 Posts: 8,842	Mainstream brick and mortar small businesses with good books, taxes paid, domestic banks, years of operation and contracts in place average less than 3x SDE or EBITDA. I very seriously doubt a 3x SDE price is justified for an adult website. 10 months earning reflects that there is a very substantial risk premium unless you own a large similarly themed network and can monetize better than the existing owner. Be that as it may, the professional sellers play against other players, not against the house. If they can get fool newbies in at that price, I guess they will. "The value of the small business is mostly determined by the cash flow (or business brokers use the term "Seller's Discretionary Earnings" instead to be more accurate). Seller's Discretionary Earnings (SDE) is defined as net income before taxes (operating income); interest; depreciation and amortization; owners compensation; owners benefits; and non recurring expenses. Most small businesses sell for 1.5 - 3.5 (multiples) times the yearly SDE, depending upon the value factors of the business. Things that determine the multiple or value factors are the stability of historical earnings; business & industry growth; type of business (service with few assets to manufacturing with significant assets); location & facilities; stability & skill of employees; competition; diversification of products, service & geographical markets; desirability of the business; depth of management; and terms of the sale. The national average is 2.76 times SDE."