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Selling my business..
Old 10-26-2013, 04:39 PM   #1
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Selling my business..

I'm currently FI and almost fully retired. I'm still operating my
business, a website, that it almost completely automated.. I
spend about 1/2 hour a day on it to keep it going. I can spend
more time on it, but there is only so much I can do to grow it.
It runs with a 95% profit margin, so it can get a lot worse before
it not making sense to keep it going. I'm thinking about a full
exit strategy.

I've been approached numerous times about selling the website,
Generally, they are in the range of 2-4x Annual Cash Flow. T
To me this seems extremely low, but my guess is that are enough
people out there that just need to money and sell their websites
that low.

Has anyone here sold there business?
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Old 10-26-2013, 04:49 PM   #2
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Old 10-26-2013, 04:55 PM   #3
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There are a lot of web site flippers out there who just want to make a quick buck at your expense. If you want a better price you might try contacting your competitors and see if they are interested. If you get most of your traffic from search engines, most experienced buyers usually aren't going to give you many years worth of earnings because rankings can and often do change over night.

If it takes 1/2 hour a day for 95% profit margin why not just hang on to it?
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Old 10-26-2013, 05:03 PM   #4
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Quote:
Originally Posted by jetpack View Post
I'm currently FI and almost fully retired. I'm still operating my
business, a website, that it almost completely automated.. I
spend about 1/2 hour a day on it to keep it going. I can spend
more time on it, but there is only so much I can do to grow it.
It runs with a 95% profit margin, so it can get a lot worse before
it not making sense to keep it going. I'm thinking about a full
exit strategy.

I've been approached numerous times about selling the website,
Generally, they are in the range of 2-4x Annual Cash Flow. T
To me this seems extremely low, but my guess is that are enough
people out there that just need to money and sell their websites
that low.
If you think your website will continue to produce the net $ that is has been, I would keep it going, and think of it like a bond position. Yes, I know that it's not as 'secure' as a bond, but if you assume it will have no growth going forward, I don't know of any decent risk-priced bond that produces yields of 25%-50% that your website is effectively producing (based on the 2x-4x annual cash flow your offers are priced at).

If, however, you think there's a good chance the website's cash flow will substantially decline in a few years, I'd take the money.

Would you still spend that time (1/2 hr /day) on your investments if you sold it and invested that cash in whatever investments? Perhaps you wouldn't need to spend as much as 1/2 hr/day...but if the dollars involved are large enough, I'd probably keep doing it.
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Old 10-26-2013, 05:15 PM   #5
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Quote:
Originally Posted by jetpack View Post
....Has anyone here sold there business?
No, but I was involved in business valuation when I was working and 2-4x cash flow seems low to me too unless the business is declining rather than growing and I suspect that is not the case. As a general rule, the value would be cash flow divided by (a market rate of return considering the risk of the business - the earnings growth rate). So if cash flows were not growing and an appropriate market rate of return was 12% then the value of the business would be ~8x free cash flow. Free cash flow would be the cash flow that is diistributable to the owner(s) of the business. I'm not sure what an appropriate hurdle rate for a business like that would be though.
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Old 10-28-2013, 09:18 AM   #6
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Website businesses can be valued differently based on the type of business. It is a different business valuation often, rather than a "traditional" business. I have had several website businesses, and am in the process of selling one now a well.

I would suggest you reach out to a business broker that specializes in this market. A valuation will cost you nothing other than some of your time. Then you can decide how and if you want to proceed. If you want a referral, let me know with a PM.
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Old 10-28-2013, 08:57 PM   #7
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Quote:
Originally Posted by jetpack View Post
I'm currently FI and almost fully retired. I'm still operating my
business, a website, that it almost completely automated.. I
spend about 1/2 hour a day on it to keep it going. I can spend
more time on it, but there is only so much I can do to grow it.
It runs with a 95% profit margin, so it can get a lot worse before
it not making sense to keep it going. I'm thinking about a full
exit strategy.

I've been approached numerous times about selling the website,
Generally, they are in the range of 2-4x Annual Cash Flow. T
To me this seems extremely low, but my guess is that are enough
people out there that just need to money and sell their websites
that low.

Has anyone here sold there business?
The default answer is to try Flippa.com to figure out your site's niche and its valuation range by looking at the sale prices of similar sites.

Personal-finance blogs are generally selling for 24x-36x monthly cash flow, so your valuation may be in line. The ones selling for six-seven figures have huge audiences, cash flow to match, and corporate buyers. Another option would be to negotiate on different terms or to include an earnout. There are also finicky legal details about liability, products (especially licenses or copyrights), image rights, subscriber lists, social media accounts, and even your Google+ account (if applicable). It's getting complicated enough that bloggers are warned to consult a lawyer if the sale price is high enough.

You sound like you have no reason to sell, but perhaps you could hire a contractor to manage it-- or bequeath the site to someone in your will?

I sat through a presentation on this at FinCon13 and talked with a few people. PM or e-mail me with more details if you want more suggestions on how to come up with a valuation and find a buyer.
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