how much should I offer this Beauty/makeup site to buy their 49% shares?

11 years ago

History suggests sites sell for about 10x monthly earnings. If they make $500 a month, that would be $5,000. But you're only buying half ownership? Divide by 2.

Though why you'd only buy 49% boggles my mind...the whole thing seems fishy.

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shane_k

11 years ago

Originally Posted by Marketing Fool

History suggests sites sell for about 10x monthly earnings. If they make $500 a month, that would be $5,000. But you're only buying half ownership? Divide by 2.

Though why you'd only buy 49% boggles my mind...the whole thing seems fishy.

To tell someone that they should pay 10x earnings just because other people have paid that much in the past with other businesses is not valuing a business, it's just following the crowd.

And here's a thought, "What if the crowd is overpaying?"

If they are then to follow the crowd doesn't make business sense.

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1 reply

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LearnNOTmoney

11 years ago

Originally Posted by Tsnyder

If the owner has no expertise why would you consider investing
any amount with him? Do you just have more money than you
want and you've decided to start a charity?

The site has only been around for 6 months and has already more than 500k post. I think it has a lot of potential. The Problem is that they owner doesn't seem to know how to turn it around, and he admits that.

Originally Posted by shane_k

To tell someone that they should pay 10x earnings just because other people have paid that much in the past with other businesses is not valuing a business, it's just following the crowd.

And here's a thought, "What if the crowd is overpaying?"

If they are then to follow the crowd doesn't make business sense.

he probably just wanted to give me a general overview of how much it would normally cost which is nice. If I can get it under 1000, that would be awesome.

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Tsnyder

11 years ago

Originally Posted by LearnNOTmoney

The site has only been around for 6 months and has already more than 500k post. I think it has a lot of potential. The Problem is that they owner doesn't seem to know how to turn it around, and he admits that.

I don't care if he has 500 million posts. If he doesn't know what
to do with it you're wasting time and money. In business transactions
the term blue sky is used for a reason...

After reading more of your posts on this subject I think you'd have
to be stone cold crazy to consider this deal.

49% of a business whose owner doesn't know what he's doing?

LOLOLOLOLOLOLOLOLOLOLOLOLOL!!!!!!!

Get my point?

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NewParadigm

11 years ago

a 49% fool is born every day.

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prchech

11 years ago

If i am the one going for this deal, i will be interested in buying out. Unless this site share is listed in stock market thats when i think it is a good deal

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wakeforce139

11 years ago

I would be concerned if I were you how they are only making $500 with 10,000 users. If the users are legit and he just hasn't been converting them it could be a tremendous opportunity.

What Marketing Fool said regarding ecommerce site valuation is correct though.

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seonutshell

11 years ago

God please dont get 49 percent. Means he has most control and is probably setting something up to **** you in the ass.

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flipfire

11 years ago

Originally Posted by LearnNOTmoney

The owner contacted me and asked if I would be interested in buying shares from their site.

the sites makes about 500 dollars a month from total revenue and has about 10k signed up users.

Even before thinking about buying it, I hope the owner has proved that it makes that amount before buying 49%.

don't take a screenshot as verification either. I'd also make sure a legally binding contract is in order.

Being honest... it's not worth buying 49% of a website with a small income. fair enough it was producing $2k+ revenue then that would be a different matter.

There is a lot of variables when investing in a site, next day the earnings could disappear. Rankings could disappear over night, is it established? how long has the site been earning $500+ per month?

It's not worth the risk, specially for 49%!

Regards,

Lee

Thanks
1 reply

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LearnNOTmoney

11 years ago

Originally Posted by Marketing Fool

History suggests sites sell for about 10x monthly earnings. If they make $500 a month, that would be $5,000. But you're only buying half ownership? Divide by 2.

Though why you'd only buy 49% boggles my mind...the whole thing seems fishy.

Thanks, this very helpful. It sounded like the typical owner who think 51 percent is still total control on his part.

Originally Posted by wakeforce139

I would be concerned if I were you how they are only making $500 with 10,000 users. If the users are legit and he just hasn't been converting them it could be a tremendous opportunity.

What Marketing Fool said regarding ecommerce site valuation is correct though.

The users are real alright. I am actually one of the users there and the place is quite active.

Originally Posted by flipfire

Even before thinking about buying it, I hope the owner has proved that it makes that amount before buying 49%.

don't take a screenshot as verification either. I'd also make sure a legally binding contract is in order.

Being honest... it's not worth buying 49% of a website with a small income. fair enough it was producing $2k+ revenue then that would be a different matter.

There is a lot of variables when investing in a site, next day the earnings could disappear. Rankings could disappear over night, is it established? how long has the site been earning $500+ per month?

It's not worth the risk, specially for 49%!

Regards,

Lee

The site is defeinly established since it is a forum but the owner just wants to expands it but he has no expertise whatsover.

Thanks
2 replies

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flipfire

11 years ago

Originally Posted by LearnNOTmoney

Thanks, this very helpful. It sounded like the typical owner who think 51 percent is still total control on his part.

The users are real alright. I am actually one of the users there and the place is quite active.

The site is defeinly established since it is a forum but the owner just wants to expands it but he has no expertise whatsover.

Well i'd make sure you both draw up legally binding contracts before thinking of handing any money over.

Regards,

Lee

Thanks
1 reply

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LearnNOTmoney

11 years ago

Originally Posted by flipfire

Well i'd make sure you both draw up legally binding contracts before thinking of handing any money over.

Regards,

Lee

Excuse my question, but how is this possible when we are from different countries? is there something we can do online instead?

EDIT: Just found out about it

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1 reply

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LearnNOTmoney

11 years ago

Alright, the dude is from another country..Wants to stay anonymous..I see him post all the time on the website though and I know some of the people in the site well enough.

He only wants to give a scan copy or screenshot copy of the shares. He also says he wants to stay anonymous and wants me to become the front end owner instead. Does not seem to want to fax terms papers with signature because he thinks it's too much of a hustle.

I am in Canada he is in the UK..

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3 replies

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NewParadigm

11 years ago

Originally Posted by LearnNOTmoney

Alright, the dude is from another country..Wants to stay anonymous..I see him post all the time on the website though and I know some of the people in the site well enough.

He only wants to give a scan copy or screenshot copy of the shares. He also says he wants to stay anonymous and wants me to become the front end owner instead. Does not seem to want to fax terms papers with signature because he thinks it's too much of a hustle.

I am in Canada he is in the UK..

LOL, what a deal!!!

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LearnNOTmoney

11 years ago

Originally Posted by NewParadigm

LOL, what a deal!!!

Is it that bad? LOL

I edited btw. He's now willing to do it.

He's a kid though. He's site has got so many potential..It's crazy. He's got 3 sections only. General discussion- makeup - diet

those are the only sections, amazingly in six months the site has over 500k post now. I remember registering back when the site was in day 1.

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2 replies

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iAmNameLess

11 years ago

Originally Posted by LearnNOTmoney

Is it that bad? LOL

I edited btw. He's now willing to do it.

He's a kid though. He's site has got so many potential..It's crazy. He's got 3 sections only. General discussion- makeup - diet

those are the only sections, amazingly in six months the site has over 500k post now. I remember registering back when the site was in day 1.

Save your money and do something else on your own. This is such an awful idea.

49% gives you what? No control... Where would the contract be bound? If something were to happen, do you think filing in Canada is going to effect someone in the UK? What stops him from selling the site for 10K... and giving you, $1,000 in return as distributions and writing the rest off as funding for closing procedures?

From a business standpoint, and investment standpoint, you shouldn't even consider this. Now if it is your personal passion and you don't care if you get burned, the go ahead and go for it.

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SunilTanna 11 years ago

Buying 49% of a company, a real one that files proper accounts and follows the proper company procedures, may make sense in the right circumstances.

49% of a loosely defined asset, split with "just a kid", doesnt even make sense. As a business plan, it's insane. You're better off simply burning your cash, at least that way you'd get some warmth from it.
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NewParadigm

11 years ago

Originally Posted by LearnNOTmoney

Is it that bad? LOL

I edited btw. He's now willing to do it.

He's a kid though. He's site has got so many potential..It's crazy. He's got 3 sections only. General discussion- makeup - diet

those are the only sections, amazingly in six months the site has over 500k post now. I remember registering back when the site was in day 1.

Yep, its bad

If you see the potential and can drive it, YOU need the control. for 49% dealing with a kid, you might as well just donate your money to charity, at least you'll get a deduction.

Spend a few hundred bucks with an attorney and do the transaction in a proper manner. But you need control. Tell the kid you know how to drive it and he doesnt have to do anything as a minority shareholder and you'll make him money.

If he balks, ask him why he isn't making money now when he has 100%?

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Gambino 11 years ago

Originally Posted by LearnNOTmoney

Does not seem to want to fax terms papers with signature because he thinks it's too much of a hustle.

Turn and run. He wants you to buy 49% of his "shares" but it's "too much of a hassle" to fax the terms of the agreements? Not the kind of business partner (or scammer) I'd want to do business with.
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Daniel Evans 11 years ago

If you do business with a kid, expect to play games!
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Tsnyder 11 years ago

Originally Posted by LearnNOTmoney

The site is defeinly established since it is a forum but the owner just wants to expands it but he has no expertise whatsover.

If the owner has no expertise why would you consider investing
any amount with him? Do you just have more money than you
want and you've decided to start a charity?
- [ 1 ] Thanks
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emelef

11 years ago

depends what valuation method you use. Revenue based or users/traffic based calculations? My estimate for 49% would be anywhere between 3k-8k, but that really depends on the niche, traffic, user quality etc etc. And of course how many months you would expect to get your investment back?

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Malcolm Thomas

11 years ago

As others have already stated I would not buy only 49% of a website or any company for that matter.

Instead focus on finding out more information about the site so that you're able to make a more qualified buying decision.

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mediamarket

11 years ago

That's way too much equity for what the site makes it sounds like a good deal for you.

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SandraLarkin

Banned 11 years ago

Absolutely not. Totally absurd to even think about. This isn't a publically sold asset.

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seasoned

11 years ago

He makes $6000 a year from knowing nothing? WOW! WHAT A BUSINESS!

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Vanilla Gorilla

11 years ago

Why not just offer to purchase the entire thing and cut the kid out completely? That way you can have free reign and not have to deal with potential legal issues.

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stoker 11 years ago

Revenue based on users and traffic of the site,Instead focus on finding out more information about the site.
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how much should I offer this Beauty/makeup site to buy their 49% shares?

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