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Tips for Valuing an Internet Business or Website in 2018

Posted by Eric Pittman in Articles

If you’ve been attempting to understand how to value an internet business or a website, you may need the support of an online business broker. The valuation process is one of the most important steps in selling your online business and it is one you should be aware of well before you list the company for sale.

While having physical assets associated with your internet business can make things more difficult, it is often hard for people who operate an internet business to understand just how crucial the business valuation is and how this will influence their appealing nature to buyers.

At Website Closers, we have extensive experience in brokering and valuing the sale of internet businesses with a number of different types of monetization strategies, including ecommerce businesses, Amazon FBA businesses, and more.

We have also sold businesses with high earnings multiples, ensuring that the seller of the company gets as much as possible out of the selling process. There are several different challenges presented to deriving a fair business valuation online. The first of these is the poor use of valuation techniques or the misunderstanding of valuation techniques.

The second of these is using or gathering the wrong information for inclusion in an analysis; and the third is overlooking extraneous factors or the bigger picture that could influence the valuation of the company in a positive or negative way.

There are several different ways that a business can be valued and at Website Closers we discuss this with you in our initial consultation so that you can have a better perception of how the business valuation will influence your bottom line. A discounted cash flow analysis is one option but these prerequisites are rarely satisfied with consistent or established internet businesses.

Precedent acquisitions is another approach to benchmarking an online business valuation. With this method, you are looking for comparable metrics including multiples of revenue or earnings. The primary prerequisite for an accurate precedent transactions analysis is access to any transaction data. This can be very difficult if this information is privately kept.

The most common method through which online businesses are valued today is known as earnings multiple. The robustness and simplicity of this methodology in the face of very rare or a lack of comparable data is extremely important and this is why many website brokers turn to this process to ensure that the seller and the buyer alike understand the methodology being used and its overall benefits. When determining that it is time to sell your business, it is valuable to have a conversation with an online business broker before deciding to move forward.

The right online business broker can have a significant impact on how easily you understand the sale and how confident you feel about your company being listed online. Schedule a consultation directly with an experienced online business broker at Website Closers today to get a better perception of what you can anticipate over the duration of the process