How much is a web site worth in a take over bid?

[carju1]

Having never even been into this part of WPW before today (hangs head in shame) and never really having considered Domain sales in detail, I find I have had the subject raised with me twice in the last few days so I'm after some advice on one of the issues.

A client I do some consultancy work for rang me up the other day and asked me how much a competitors web site was worth in a take over. My client (UK based retailer) has a web site he uses to generate sales leads striclty within the UK. He is involved in a friendly take over of one of his competitors. They are in the arguing the value stage of the negotiations and his competitor threw into the valuation 'the value of his website'.

Having checked out the website it is of the style www.thecompaniesname.co.uk (sorry can't give out real name) and is a purely a 'we are here' 'we sell this' 'come visit the showroom' type site with sub 1000 visits per month (and I think thats an inflated figure). Short term all I'll do with the URL if my client buys is tell people they have been taken over a point them to the client existing site. Long term I'll probably dump it within 2 years. Its almost invisible on the search engines.

So what is a web site worth in a take over bid. Anyone got any ideas?

Regards and thanks

Julian

[simonm]

What's a web site worth?

I have just been through a similar process with two companies though complicated by the fact that some generic domain names have been included and that the web sites score exceedingly well for key search terms.

Both companies are management buyouts from a group of companies owned by a major bank, one has identified the need to consider the web site ownership from early days of the negotiations, the otehr has been sold and seems to be closing its eyes to the issues of web presence.

Fortunately or unfortunately - depending on your point of view - little relevance has been associated with the web by these companies despite identifiable advantages in gaining clients. This is partly due to a 'not invented here' ie the Marketing people of both comapnies weren't part of the initial web development that went on about a year ago.

Sorry that this doesn't answer your direct question, The web presence has been bundled into the overall assets of the company and not singled out as an asset with a defined value.

The domain names directly associated with the company name I would have thought had no distinct market value and I would expect in legal terms would be very difficult to seperate from the company being sold - who else would be able to use them? Realistically the www.companyname.co.uk should be included within the sale at no additional cost.

However a domain name www.widget.co.uk which might have good SEO position should be valued within the sale of the company in the same way as a leased advertising hoarding might have an asset value.

I think I have rambled a bit

[carju1]

Thanks Simon,

Thats about what I figured and was my initial advice to the client. I think they just want to throw in everything including the kitchen sink (OK OK actually its their office desk but...) and try for the most money they can.

Anyone else care to comment.

Regards

Julian

[activeco]

Well, the site is actually quite easy to valuate.
It is simply the monthly revenue it generates over a long term (after all costs), multiplied by some factor, usually 12 to 24.
Traffic alone doesn't mean much as the niche, converting, etc. plays significant role.
200 uniques a month with conversion ratio of 0,5% selling airplanes brings substantially more than 100,000 uniques looking for free pics.

Of course even a well developed and profitable site, can have some more intrinsic value than the current revenue if the site have more potential by using SEO, marketing and other techniques, currently not utilized.

[keywordguy]

I'm in agreement with activeco.

I would also add that it would be hard to demonstrate any real value a domain ads to a deal at 1000 uniques per month... especially if the company doing the takeover is just going to canabalize the other company's assets, inventory, etc.

This is certainly a subjective topic and I wish you success.