How Do You Value A Website Or Internet Business?

277 words - 2 pages

If you’ve been trying to understand how do you value a website or internet business you’ve come to the right place. Accurately valuing a website for sale can for many be the most challenging part of the purchase process. The removal of physical assets with internet businesses can sometimes complicate valuations further but if you’re clear on the pros and cons of the methods available, gather the right data on the ...view middle of the document...

At FE International (FEI) we value and broker the sale of internet businesses with a wide range of monetisation strategies (e.g. SaaS, AdSense, Subscription) across almost every niche. We’ve sold businesses with earnings multiples ranging from 1.5x up to >6x (more on that later) and seen more than a few interesting valuations devised by buyers! From experience of 300+ transactions we’ve pulled together some of the best practices from our most experienced investors and snippets of knowledge from our own acquisitions to provide some guidance for new and seasoned buyers alike to answer how do you value a website or internet business.

Stepping back and reflecting on the issue, the main challenges to deriving fair business valuations seem to be 1) misunderstanding or bad use of valuation techniques, 2) gathering or using the wrong information for inclusion in the analysis and 3) oversight of extraneous factors or ‘the bigger picture’ as it were. In this post, we will dispel some common valuation myths, discuss some useful valuation techniques and provide examples of real life situations we have seen recently to help crystallise the facts.

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