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How Much Your Website is Actually Worth | FE International

December 11, 2019

Selling a Business

It’s the most common question we are asked by website owners: What is my website worth?

At FE International we speak to thousands of buyers and sellers of internet businesses every year. We’ve put together this resource to help answer ten of the most common questions we are asked when selling websites.

How much is my website worth?
What qualities make my website worth more?
Why should I sell my website?
Where can I advertise my website for sale?
How do I sell my website?
When is the best time to sell my website?
What do buyers look for when they invest in an internet business?
What kind of websites are worth the most?
What happens if my website doesn’t sell?
What happens after I sell my website?

How Much is My Website Worth?

There is a lot of inaccurate information out there – often from so-called authority sources and it is often difficult to know who to listen to.

In simple terms, the average website for sale at FE International is sold for 2.5-5x annual net profit (24-48 months). More specifically, we use “seller discretionary income” instead of net profit which takes into account (by “adding back”) costs that are not required to run the business but may have been used by the owner for personal benefit (such as a company car). Some internet businesses are worth more than this, others are worth less. A good analyst at a M&A advisory should be able to provide an accurate valuation based on their experience of previous sales, analysis of your business and expertise in its particular niche. There is no such thing as a standard industry multiple, nor is there an automated way to calculate a valuation.

As an M&A advisory who has completed over 1,200 sales we are very accurate with our valuations. Be careful of brokers who provide a high valuation (such as 10x annual net profit). This is an extremely common strategy to persuade sellers to list, whereas in reality, a very small number of businesses are worth that.

If you would like to learn more, we have a more detailed resource on website valuation (recommended for more advanced readers).

If you would like an expert valuation of your online business, please fill out our short form and one of the team will be in touch about selling your website.

Should I Use a Website Value Calculator?

We recommend caution to anyone interested in using an online calculator to determine how much a website is worth. While website worth calculators and valuations tools can seem convenient and time-efficient, the results are often of little value due to the simplicity of their calculations. Many of them use publicly available ranking systems, which are inaccurate and will not be able to drill down into precise business models and many of the valuation factors that an experienced valuation expert can. Accurate valuations for online business models require a rich stock of precedent transactions to draw from, as well as an appreciation for every business’ unique selling points. We recommend that business owners peruse an alternative method of valuation. Remember, many online business brokers and M&A Advisors will offer free valuations services.

What Qualities Make a Website Worth More?

There are hundreds of variables that affect a website’s valuation. Here are some of the important ones:

Stable or growing traffic (this must be sustainable and not a one-off spike).
Predictable revenue sources (mainstream networks, or deals with contracts in place).
Google Analytics set up correctly and tracking.
Recurring revenue or regularly returning visitors.
Diversified traffic sources (not all Facebook or organic search as they can be at risk with algorithm changes).
An active social presence and mailing list.
In English/target market primarily English-speaking.
Legally sound and no disputes in progress.
A protected brand with no trademark, design or copyright concerns.
Systems and processes in place that are documented ready for a handover.

You should also see this post on Entrepreneur about doubling the value of your online business.

Why Should I Sell My Website?

Sellers can choose to exit their businesses for a number of reasons but here are some of the common ones:

A seller wants the capital to invest in a new venture.
A seller is approaching retirement.
A seller is no longer interested in the internet business.
A seller has other businesses and no longer has the time to run their website.
A seller feels they have maxed out their ability to grow a business.

Where Can I Advertise My Website for Sale?

If your website makes less than $1k a month, we recommend that you sell your website yourself through a marketplace such as WebsiteBroker or TransferSlot.

If your website is making between $10k-$10M a year, we recommend that you work with an M&A advisor. An advisor can provide support, guidance and invaluable expertise maximizing the value of your business in preparation for a sale.

For more information about working with an M&A advisory, try our Seller FAQ.

How Do I Sell My Website?

Choosing an M&A advisory service gives you a wealth of experience and expertise which ensures your goals are met. FE International has the largest full-time team in the industry and has completed over 1,200 transactions.

If you choose to work with an M&A Advisory such as FE International, we generally ask for three things:

At least 12 months of financial accounts (the more, the better)
Essential business metrics (Like churn for SaaS, conversion rates for e-commerce, sales data, and organic traffic reports)
Honest answers to a series of questions about your business (usually takes an hour to complete)

An analyst will conduct due diligence on your internet business and establish a valuation. If the valuation is below what you wanted to exit for, a reputable advisor should provide advice on how to achieve your target valuation.

When is The Best Time to Sell My Website?

There is no set reason for an owner wanting to sell a website. However, timing is key and you want to sell your website while it has a sustained period of steady growth, no matter your reason for sale. Don’t make the mistake of selling when it’s on a decline or you have completely lost interest (and are doing a substandard job of managing the website).

Websites in a stable holding pattern also see success, provided the workload is manageable and worthwhile relative to the revenue and profits of the business. Buyers like to see a website that is growing or that they can grow. We often see sellers that have fallen out of love with their businesses, but make sure to keep working (especially during the sale process) to ensure you don’t leave money on the table.

What Do Buyers Look for When They Invest in an Internet Business?

Potential buyers are looking for profitable businesses that are sustainable long-term and have growth opportunities. Broadly speaking, we work with three types of buyers which are; offline individuals looking for a passive income, online entrepreneurs and investment funds. Some buyers purely look at the finances whereas strategic buyers might buy a business that compliments their current portfolio. We also have buyers who are simply interested in the niche and want a project to work on. FE International has a network of over 50,000 vetted buyers and 94.1% of businesses that are listed with us are sold in 60 days. We work closely with our buyers to make sure we understand what they are looking for so that when we list your business, the right people are looking at it.

What Kind of Websites are Worth the Most?

At FE International we sell a wide range of websites and internet businesses. There’s not one particular type of website or niche that comes out on top. The most important factor is whether the website is profitable and you can demonstrate to a buyer that it is sustainable and has areas for growth. Much of this should be determined from monthly revenue figures. Websites under a year old will have trouble demonstrating this so multiples go up with age (along with other factors). Buyers will be interested in seeing monthly revenue figures over time.

What Happens if My Website Doesn’t Sell?

Your success rate can depend on a lot of factors but one of them is whether you sell the website yourself or through an M&A Advisory. According to Flippa, their success rate for website sales is an average of 54%. FE International has a success rate of 94.1%. However you choose to sell your website, it is important that you take on the feedback of prospective buyers and your advisor to put your website in the best position to sell in the future.

What Happens After I Sell My Website?

If you work with FE International we prepare a purchase agreement for the acquisition which will outline terms beyond the point of sale. These vary by website as they depend on the size, complexity and the buyer. However, terms could include: