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Don’t Just Use Multiples of Cash Flow to Determine Website Valuations

Posted by Leo Decker in Articles


When it comes to selling a website business there are many factors involved. The very first step is realizing that it’s best not to sell the website on your own, but to seek out an ecommerce business broker like to help you determine the most accurate website valuation for your company and all of the other variables along the way.

As has been in the website selling industry for over two decades, they are in the best position to determine your company’s website valuation. Many eCommerce business brokers quickly settle on using multiples of cash flow to determine valuations, but, with their breadth of knowledge and experience, know that using this simple formula may not provide you with the most accurate value for your website.

Many factors have an impact on the purchase price of a website business. There is an entire scope of items to consider including:

  • Past, current and future operations and how they will affect the purchase price.
  • A review of scale opportunities and the subsequent cost of scale (to help identify near-term growth opportunities to create a future cash flow model post sale as well as post scale).
  • Can the business be expanded into other marketplaces and other platforms?
  • Has the advertising budget been underserved or not served properly?
  • Do organic searches make up a large portion of the visitors?
  • Is the business in a niche sector or has barriers to entry?
  • Has the business created its own brand?

These are just some of the items that should be considered when determining a website valuation when selling a website business. Online calculators exist to help those interested in selling their websites to get a better idea of the price they should place on the site, however, this is clearly not the proper way to go about determining the value of a website company. Using the advice of an expert eCommerce business broker like will provide you with the most accurate price considering all of the above, market trends and more.