valueing a web marketing - affiliate company

[zaghomat]

Hello,
I want to sell my share of my web business. We have a lot of websites in the poker and gambling market, a bit in the dating market and a few more in others random market.

We average for the last 12 months 22K € in income each month. How would you go to value the company. I know I could just ask my accountant, but I feel they are not very knowledgable in the web business sector.

Anybody has some formula that i could use to start the process of valueing the company?

P.S. : I'm not trying to sell anything here, it's my partner that is gonna buy the shares.

[MPC]

There are exceptions, but in this kind of business valuation is often based on current revenue (and not potential revenue). Monthly revenue x 10 (sometimes x 12) is a typical formula. So in your case, you can value your company at about 220K. It's a very simplistic approach. I would personally tend to include asset value to the forumla. In other words, do you have websites that don't produce $$$ but still have a value? Add that in. So maybe all in all you're looking at 250K or so. Difficult to say without more info.

The idea is that an investor should recoup his investment in a resonable timeframe. (i.e. 12-18 months).

[Strider1973]

There are many different approaches to value a company. You could use a multiplicator. Real businesses are often valued around 2 to 6 years of sales. As for income, a typical EBIT multiple would be 8 (making your business worth more than 1m$).

In online poker, these multiplicators are often only 10-12 months of sales, because the players won in the past could switch to other poker rooms.

If you have a mix of revenues with other sites, I would not sell your business as cheap as 1 years of revenues. 2-3 years of revenues seem much more reasonable.

Another approach could be: what is the business worth if you do not do anything more with the websites? For how long will it still generate revenues? Make some assumptions and put them in an excel sheet.

A third approach could be: what would it cost to build up such an empire of websites? Make again some rough estimates.

A fourth approach would be: what was paid in recent transactions? Take some key figures like visitors/month, revenues/month etc. You can get an idea of market prices at flippa.com.

Anyway, I would talk to your accountant, and no way I would let go a an existing and working business for only 12 months of revenues.

And: if you want to reduce your "upside risk", try a model where you sell today, but still get a (decreasing) share of revenues for the next few years.