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Valuing Your Website

by kindsvater
5 replies
McClatchy just sold its share of cars.com in a deal valuing the website at $2.5 billion. The valuation was 15 times annual cash flow. Financial reporting indicates newspapers typically sell for 5-6 times annual cash flow.

A few points:

- cars.com sells for a premium versus newspapers because digital advertising is growing and print ads are declining.

- The "IM" niche is incredibly tiny where a major destination like the Warrior Forum sells for $3 million, or 1/1000th the value of cars.com.

- The "small" mentality permeating IM includes the valuation of websites. Look at Flippa. How often do you see a site selling for just a few months of revenue? Sometimes less than a month. Of course, there can be scams a plenty in valuing microsites. But still. How many sites do you see sell on Flippa for just a newspaper rate of 5 times annual net profit? .

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#valuing #website
  • Profile picture of the author Frank Donovan
    Originally Posted by kindsvater View Post

    The "small" mentality permeating IM includes the valuation of websites
    Ain't that the truth!

    Actually, I don't believe even the Warrior Forum went the Flippa route. Serious website transactions almost always involve specialist brokers or direct approaches.

    .
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  • Profile picture of the author SEO Power
    Originally Posted by kindsvater View Post

    McClatchy just sold its share of cars.com in a deal valuing the website at $2.5 billion. The valuation was 15 times annual cash flow. Financial reporting indicates newspapers typically sell for 5-6 times annual cash flow.

    A few points:

    - cars.com sells for a premium versus newspapers because digital advertising is growing and print ads are declining.

    - The "IM" niche is incredibly tiny where a major destination like the Warrior Forum sells for $3 million, or 1/1000th the value of cars.com.

    - The "small" mentality permeating IM includes the valuation of websites. Look at Flippa. How often do you see a site selling for just a few months of revenue? Sometimes less than a month. Of course, there can be scams a plenty in valuing microsites. But still. How many sites do you see sell on Flippa for just a newspaper rate of 5 times annual net profit? .

    .
    Sites ownes by internet marketers do sell for up to 20 times the monthly net income which is not up to 2 times the yearly income, but then, you can't compare affiliate and small business sites to sites owned by big brands. It only makes sense that they would sell at a higher multiple because they are more valuable and they'll be around long enough for the buyers to make more than they spent to acquire them.
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  • Profile picture of the author Lance K
    Freelancer.com buys Warrior Forum: ‘the marketing community that never marketed itself’

    In the article it says WF had almost $1 million in revenue in 2013 with earnings that were almost the same due to low operating costs.

    Therefore, it's likely WF sold for somewhere in the neighborhood of 3.5 to 4 times earnings.

    Without seeing more of the financials it's hard to say for sure, but I'd say Freelancer perhaps got a slight bargain. Overall though, it seems like a pretty good deal for both sides.
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  • Profile picture of the author Rod Cortez
    I'm guessing Allen got more than just the $3 million plus for the Warrior Forum. Life time supply of cuban cigars comes to mind.....

    RoD
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  • Profile picture of the author Lance K
    Originally Posted by kindsvater View Post

    - The "small" mentality permeating IM includes the valuation of websites. Look at Flippa. How often do you see a site selling for just a few months of revenue? Sometimes less than a month. Of course, there can be scams a plenty in valuing microsites. But still. How many sites do you see sell on Flippa for just a newspaper rate of 5 times annual net profit? .

    Very true. It is worth noting though that a lot of those websites are not businesses.
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