website valuation

Paragon · #1 (**permalink**) 24-09-2008, 11:17

Hi,

Someone has made an offer to buy one of my e-commerce websites, prior to closing that ltd company.
However I have been asked to get a written valuation from a 3rd party prior to the sale for the company records for when the company is closed.
I'm fairly sure I know what answers I'm going to get but does anyone know of any companies that offer such a valuation service of a website/e-commerce business. The sale is the website (and the PC) only, no stock or other assets.
Any advice or suggestions appreciated
Thanks

Interconnect IT · #2 (**permalink**) 24-09-2008, 11:27

Blimey - that's a tricky one. You could ask a design/development company to take a look and provide an estimate - but it's a truly vague science.

Uhm, we could do that - perhaps spend an hour reviewing the site, its platform and how up to date it is and give a rough estimate on that basis.

Calibre Designs · #3 (**permalink**) 24-09-2008, 11:51

Interesting proposition.

I am sure it depends highly on the SEO of the site, how many new visitors it brings in a day etc....

openmind · #4 (**permalink**) 24-09-2008, 12:01

As the sale will all be goodwill you will need to factor in several factors:

Profit level (normally worth 12-15 times monthly profit)
Search engine positioning
Traffic level
Customer base
Ease of use
Software used for development
Design and appearance

Combining the value of these factors will give you a ballpark estimate but it really is finger in the air time...

Indizine · #5 (**permalink**) 24-09-2008, 13:04

Why do you need a valuation?

ARK · #6 (**permalink**) 24-09-2008, 23:29

you could get the opion from a similar company by asking them;

to give you a quote of how much they would charge for developing such a site
then factor in any profit margins that you want to earn, factoring in any negotiation that will take place

i had a very similar situation with a client of mine, who had developed a website that he was about to sell, and thats the approach we took

admagic · #7 (**permalink**) 24-09-2008, 23:54

Quote:

Originally Posted by ARK

you could get the opion from a similar company by asking them;

to give you a quote of how much they would charge for developing such a site
then factor in any profit margins that you want to earn, factoring in any negotiation that will take place

i had a very similar situation with a client of mine, who had developed a website that he was about to sell, and thats the approach we took

Realisable value can exceed cost if the site already has valuable traffic.

One useful metric is the number of uniques multiplied by the adwords bid cost for each of the search expressions that reaches it.

Since that is what competitors justify paying for that traffic ergo that is the value to competitors.

PE are low for websites. The best I have heard is 2 years....more normally less than a year as transaction prices. I have seen crazy valuations on higher multipliers, doubt if they would sel at that.

UKSBD · #8 (**permalink**) 25-09-2008, 23:25

I'm in a similar situation.
I have a number of websites that are registered to me personaly which I
would prefer my limited company to own, and also a number which are
registered to my limited company which I would prefer to own.

As I am effectively buying and selling from myself I just need valuations
which will keep the tax man and companies house happy.

OldWelshGuy · #9 (**permalink**) 26-09-2008, 06:55

There are many factors that can alter the valuation, but the main ones are current profits/turnover, potential for growth.

EG. you have a martial arts shop. it might not be making a lot of money, BUT if a wholesaler bought it, it would increase the profitability immemdiately. A manufacturer might value your 30,000 strong niche mailing list VERY highly. The value of a site like anything is what people will pay for it, and while turnover/profit are ok, it is the potential fit into the buyers current business that makes it of value.

Eg. a business might be publishing a newspaper, their competitor charges nationally at £7 PSCC, the independent is charging £2. By bouyiong and closing the independent paper, the buyer can increase his rates to the £7 he wants to charge and people will be left with no alternative (This is a real world scenario not made up).

UKSBD · #10 (**permalink**) 26-09-2008, 13:40

All very true, but are there any companies or regulated bodies that do
website valuations, which if used, are acceptable by Companies House
or HMCE?

For instance, how would I get an acceptable value if I wanted to either
sell a domain registered to me to my company, or a domain registered to
my company to me?