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How much should I pay for a big adult community?

Discussion in 'Making Money' started by jull122, Sep 16, 2009.

  1. jull122

    jull122 Newbie

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    Hi,

    I'm not sure if this is the right place to post it, but I want to buy a big online adult community. I am in contact with the owner and he told me that he is willing to sell the whole site if the price is right (he added that he wants to move on with another project). The site is 14 months old, fully subscription based and has no ads.

    He gave me the following stats:
    - Revenue per year: 750k
    - Spending on marketing (ads, blackhatting etc.) per year: 200k
    - Registred user: 2 million
    - Conversion rate: 0.95%
    - Monthly UVs: 2 million
    - Monthly new Users: 250k
    - Monthly pageviews: 20 million
    - 60% of the user are from the US, Canada, UK and Australia

    The site is pretty new and has a good domain name which has a lot of potential. He told me he got offers alone for the domain for around 150k which he declined. I think the domain name is probably worth that price.

    What would you initally offer him? What would be your highest offer?
     
  2. Haspel

    Haspel Power Member

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    Seems a bit fishy to me.Not many people will leave a 750k business just to move to another project.If you are making that kind of money I'm pretty sure that you will be smart enough to hire someone to manage the site for you if you are no longer interested in that niche.Also you might want to make sure that the 750k revenue is after expenses because that 200k an year for marketing and probably about the same amount if not even more for salaries of the employees will really cut your profit.

    In conclusion if the 750k is real profit than I wouldn't go higher than 550k. And if that 750k is before expenses than it can go from 100k to 300k depending on how much he is currently spending on maintenance.

    My advice would be to get your accountant to take a look at his books and see how things really are.The business owner can always make this sound much better than it actually is.
     
    Last edited: Sep 16, 2009
  3. jull122

    jull122 Newbie

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    He told me it's only revenue. Profit is around 500k. But before I seal the deal I obviously will take a look at his books.

    I don't think he will sell it for that price. Even I think it's kind of low, because if I give him 500k I just have to wait 12 months and I already got back my investments. Don't businesses get a valuation of around 10x the revenue?

    He told me the maintenance of the site is quite easy, he only needs around 4hrs a day, so I probably won't need anybody to this stuff for me, or pay him just a small salary.
     
  4. Haspel

    Haspel Power Member

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    The business climate is constantly chaining and 12 months is a long time he might be making 500k now but no one can say for sure how much he will make the next year.I would say that paying him 500k for 500k an year business is high.I wouldn't pay more than 250k-300k.Keep in mind that you will be the one waiting to get your money back and what he gets is guaranteed.Also if he really used blackhat techniques and his site is dependable on organic traffic the price could get even lower considering the fact that sooner or later search engines will catch up with him and you will be the one who will have to deal with the consequences and the loss of revenue.
     
  5. chromepaper

    chromepaper BANNED BANNED

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    if he is that serious about selling his business and after research you agree on a price, go visit him for a week and be his shadow and see EXACTLY how it is ran and what is REALLY needed
     
  6. blackhatsith

    blackhatsith Registered Member

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    Be careful and have an accountant or attorney assist you if you decide to go through with this.

    250k new members every month? Sounds a bit far fetched, especially for a new site. There are scripts that will automatically populate a site with fake profiles. Plus, I don't see why someone would want to drop a 750k business, no matter what the reason.

    By the way, what is the domain? I'd like to take a look and give you more feedback.
     
  7. jull122

    jull122 Newbie

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    About the blackhatting techniques: he told me that around 40% traffic is organic and the rest is mostly through ads he buys, only a small percentage is with actual blackhatting.

    I see most of you guys would say I should pay him around 300-500k. But I think, he wants more than that, I myself also thought I should pay him more. Because when you read about the Acquistions on Techcrunch of internet companies, the price is mostly around 10x the revenue. What should I do? Where should I draw a line? I actually really want this site, because I think it has some good potential.

    All in all he seems to be trustable, he gave me a guest account to a lot of his admin areas and most of the numbers are real.
     
  8. sk1ll

    sk1ll Junior Member

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    the site is 14 months old! 250k new members a month!? Hell no...

    Check it this way... a site that is under the top 1k sites in the world doesnt get 250k new members a month (A specific forum I frequent..)

    This has scam written all over it. You wouldn't be in direct contact with the guy anyway. A site generating 500k profits is worth at least 6,000,000 ... who leaves a 6mm job? No one, not unless its a scam. A website of that size, that revenue, would not be brokered through personal emails, it wouldn't even be advertised that way.

    Run.. run away.
     
  9. toxtom

    toxtom BANNED BANNED

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    At least 1,5mil!
    Someone must be nuts to sell 500k/year earning site for only 200-300k as someone suggested- It ain't working like that!

    And yeah 250k new members/month- that's A LOT
    Seems like he really wants to sell or just feels that it will just die off really soon
     
  10. jull122

    jull122 Newbie

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    Im pretty sure it's not a scam. 250k users seem to be true as far as I can check it (and I tried to do it several times, spending a lot of time). And yes the site is pretty high in the alexa ranking and he gave me a guest account to the service where you can check all the stats.

    And yes I also think I shouldn't start with 200-300k this is way to low and won't make a good impression.

    I'm pretty sure most of it is legit and I will meet him in a few weeks in person and he will show me everything about the site.
     
  11. toxtom

    toxtom BANNED BANNED

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    Btw, What stops you from just duplicating his site and making your own?
    It will cost way less then that ;)
     
  12. sk1ll

    sk1ll Junior Member

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    Good luck, I'm calling fake just on the premise and procedures going about the sale. If its not a scam, he at least knows something you don't... no one in the internet world would let go of the property for less than the $6,000,000 figure.
     
  13. jull122

    jull122 Newbie

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    I thought about that and we talked about it before he gave me a lot of informations about his business, if I really want to be succesful I kind of need this domain.
     
  14. jull122

    jull122 Newbie

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    Thanks everybody for their suggestions, but they are a bit wide spread. So I would appreciate it very much if some other people could give their opinions to the whole deal especially to the initial and maximum offer I should give.

    Thanks in advance!
     
  15. Moto801

    Moto801 Senior Member

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    Offer him $1M for everything...

    Turn around and flip it instantly to someone else for $3M..

    Laugh all the way to the bank..
     
  16. dizz

    dizz Elite Member

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    rule of thumb is that a business that is profitable is worth 2 yrs of current profit that should be the offer...those stats though don't seem on the up and up...be careful.
     
  17. bobbylove321

    bobbylove321 BANNED BANNED

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    The site's stats do sound a bit "too good". What is the website brazzers.com? For a site that big to be only 14 months old is a bit sketchy. Usually adult sites take 2-10 years to get to where they are.

    Make him sign a contract that says if he manipulated the data, then he is liable to pay your money back plus 15% for wasting your time, see what he says.
     
  18. jull122

    jull122 Newbie

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    I already thought about getting an attorny to help me. But what would you offer him? Pay as a maximum?
     
  19. bobbylove321

    bobbylove321 BANNED BANNED

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    jull122,

    I would need to know the site before I can make a "judgment" on how much I would pay, but according to your stats, I'd pay him $400k-550k
     
  20. voidale

    voidale Jr. VIP Jr. VIP Premium Member

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    lol if you got got 300-500k keep it in your pocket ;>