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How much can you sell a business for?

by imaddict
8 replies
I have a question to anyone who has ever sold an online business: what are the ranges (high/low) that you can sell a business for that makes approx. 25K/month with approx. 15K/month net and huge potential (lists, forum, blogs, products, etc...)

I know that it varies a lot but I'm interested in figuring out the range. Thanks.
#business #sell
  • Profile picture of the author NinjaReports
    How much you sell for depends mostly on the history of the site and how long it has had its traffic/revenue for. A site that's been around over a year and has fairly consistent net profits of $15k/month can easily be sold for $300-500K or more if it's in a well established market and the product/site is good quality. If you have a one-of-a-kind type of service making good revenue then you can often find a buyer or company that is willing to pay a hell of a lot more, otherwise, for simple content sites they normally sell for 1-5 years worth of revenue if they have been around for a long time. Of course if you're selling a business that has only been around for a couple of months you would be lucky to get 6-12 months worth of revenue when you sell out.
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    • Profile picture of the author imaddict
      [QUOTE=NinjaReports;198720] A site that's been around over a year and has fairly consistent net profits of $15k/month can easily be sold for $300-500K or more if it's in a well established market and the product/site is good quality./QUOTE]

      Interesting... can you please elaborate on how you got those figures?
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      • Profile picture of the author NinjaReports
        Originally Posted by imaddict View Post

        Interesting... can you please elaborate on how you got those figures?
        That is what most people experienced with site flipping will tell you. Of course it depends tons on the market and the nature of the site, so selling for 1-5 years worth of yearly revenue is just a general guideline. Some sites sell for way more than that and there are sites LOSING money that still sell for a lot, as long as they have high revenue. Depends on a lot of things.
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  • Profile picture of the author Platinum Matt
    Reality is you'll NOT sell for much to ONLINE business buyers... There seems to be some weird expectation that 3-6 month net revenue is a fair price. It's not.

    Sell to offline buyers - they'll value a business more appropriately, especially one so "hands free" as an internet biz.
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  • Profile picture of the author Todd Walker
    A business can sell for anything between $10 and $2.5 billion.
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  • Profile picture of the author imaddict
    Thanks for the responses everyone. Do you know of any resources I could get my hands on to help me evaluate what my business could sell for?
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    • Profile picture of the author Lance K
      For a privately held company, you should be able to fetch 6-8 times annual net income.
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  • Profile picture of the author msafi
    One of the most important factors to consider when investing, selling, or buying a business is the price-earnings ratio. Don't let this term scare you, it's very simple. This ratio basically tells you how long it would take for you to recoup your entire investment in this business and start generating profits.

    I'm not in the stock market, but I remember Apple having a price-earnings ratio of 40. This 40 means that you will recoup your investment in Apple's stock after 40 years! Obviously no one would wanna wait that long for their money. But people still bought the stock at this price point because of one important reason: Apple was expected to grow very quickly. That's also why hot start-ups with a bright prospect sell for a P/E ratio of 30+. If everything goes as planned, this 30 will quickly drop to 3, and investors will recoup their investment in 3 years and start making profits.

    So, if you have a business that makes 15K/month. That would mean 180K/year. With these figures in mind, calculate a fair P/E ratio.

    One way to do that is to look at the current P/E ratio of other companies in the industry; how much they sold for. Then adjust your own price earnings ratio depending on how better/worse your business generally is.

    If similar companies sold for a P/E of 15, maybe yours could sell for 20. That would mean your business is worth 180K X 20 = 3,600K. Congrats, you can retire now.
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