Need Help With Website Valuation

Smith said:
So @finnegan... what happened?
Click to expand...
I did what you told me and they changed their mind about the phone call. Instead, they upped their offer to just over 1/4 of my asking price. But now they have mentioned a call from their attorney will follow if I don't take their new offer.

I don't know if they're bluffing or not as they have not mentioned specifics. Since I just opened my doors, I'm not making diddly squat yet with this business so there's no money to recoup. And frankly, I don't see how they can have a cause for action here as I have just as much right to be in this space as they do.
 
Don't know what you said to them via email. Could be bluffing on an attorney, could not be.

I have an attorney and flat out asked him earlier this year how much will it cost to defend against a lawsuit. He told me 10k to defend, which he said he can get dismissed because of our Terms and Conditions. Doesn't matter if you mentioned specifics or not. A lawsuit doesn't have to make sense to you to be filed. Ridiculous lawsuits are filed everyday. Then you are paying an attorney to defend yourself. Sure, it could be a scare tactic on their part but do you want to risk it and find out if they are bluffing or not?

In business, it's dog eat dog.

Since you said you will not be profitable for maybe a year or more..... I would do this:
secretagentdad said:
My main point is if some ying yang will pay you a lump sum to go compete somewhere else.
Go compete somewhere else.
Maybe you can get a ying yang to pay you to go away again if you're lucky.

Getting cashed out and being able to redeploy with out having to put the year of work in is just super nice.
Just make sure you don't get dorked around for disclosure with out some form of consideration.
Click to expand...
 
finnegan said:
I did what you told me and they changed their mind about the phone call. Instead, they upped their offer to just over 1/4 of my asking price.
Click to expand...

Ok, so this seems like a negotiation going on here right? Would you be ok with 50%?

If you counter with 50%, they're probably going to go 30% or 35% depending on how hardass they are. I'm no genius in negotiation, probably quite bad to be honest, but figure out what you can live with?

Is it 50%?

I'd probably accept 50% of a "go away" counter if it wasn't profitable, but then again, I'm no startup guy, just a hustler looking to put money in my bank account.
 
finnegan said:
... they upped their offer to just over 1/4 of my asking price. But now they have mentioned a call from their attorney will follow if I don't take their new offer.
Click to expand...

Nothing like the threat of a "call from our attorney" to compensate for a lack of leverage, no creativity, and overall shit negotiating skills.... you're dealing with A players.

First, do they have your details, company information, or any actual identifying information? Are you in the same country as them? If so, @coredev makes a few good points. If not... meh.

Also, how aggressive was your original number? Is 25% of that number worth it to you? Or is it 50% like @bernard suggested?

There are many ways to play this... and they all depend on your situation (finances, risk tolerance, experience, willingness to get lawyers involved yourself, etc, etc)...

Unfortunately, no one here has enough information about you, the competition, your niche, or anything else to give you sound advice... we can just share a few thoughts based on the limited information you've provided to try and help you navigate the situation.

But, what we do know is that this business is very new, your competition doesn't want you in the arena, and you're asking for suggestions on how to navigate negotiations on this forum.

With this in mind, if you were one of my close friends, I'd probably suggest that you take the easy money, relax for a few weeks, and try not to blow it all on women and champagne on New Year's Eve.

Just be careful if you do accept the current offer... you don't want to sound too keen, you might end up empowering them (or their "attorney") to squeeze you even harder.
 
Just wanted to give an update here...and hopefully get some advice on creative contracts if possible.

I've decided that I'd be interested in cashing out and doing something else, so we are negotiating. I thought about what @Smith said regarding a creative negotiation and it occurred to me that since I'm not happy with their current bid, a chance to grow the business a bit more before selling might work better. Basically, I'd be able to sell the business to them at any time for the next 2 years. During this time, I would grow the biz to develop organic rankings and optimize paid ads/email campaigns and whatnot.

My net rev is presently less than $100/month with paid ads being slightly profitable at this point using a lifetime customer value. The email campaign has not yet started but I should have that done in the next week.

Organic rankings are still on page 3 and higher but every KWD I'm looking to rank for has a KD of under 30 on SEMrush. Any idea how long it would take an SEO simpleton to rank in top 3 spots for such keywords?

And how would I set up this contract? Would I use a multiplier of net revenue per month to determine future price points the other party would have to buy in at?

Thanks to everyone's input so far.
 
finnegan said:
I'd be able to sell the business to them at any time for the next 2 years
Click to expand...

Interesting... but how does it benefit you?

It sounds like you're agreeing to set a fixed future value for the company based on revenue... what about other factors? What if additional buyers come onto the scene? It sounds like you just eliminated all of your negotiating leverage and you're agreeing to an arranged marriage for no reason whatsoever.

For what it's worth, "options" like this are usually instigated by the buyer. The person who is getting the option to buy at a future date (using an agreed-upon formula) typically pays the prospective seller to purchase that option.

Here are a few additional considerations...

finnegan said:
My net rev is presently less than $100/month
Click to expand...

Assuming you mean $100.00 and not $100k per month, what kind of offer are you looking at? Something in the range of 3k to 6k?

If that's the case, how much can you realistically increase the offer over 12 - 24 months if you keep working on it?

This is especially true if you are relying on SEO and you're sitting on page 3. SEO is fucking hard... and it doesn't seem to be getting easier.

Do you have any other projects you can flip that cash into if you were to sell now? How much money could you make doing that instead?
 
Smith said:
Interesting... but how does it benefit you?

It sounds like you're agreeing to set a fixed future value for the company based on revenue... what about other factors? What if additional buyers come onto the scene? It sounds like you just eliminated all of your negotiating leverage and you're agreeing to an arranged marriage for no reason whatsoever.
Click to expand...

It benefits me in that I can buy more time to sell the biz to them and increase its revenue and value which I know I can 1 year from now, while also avoiding them taking legal action. However, that's a good point about other buyers later being interested if revenue increases. A potentially larger purchase from another party is something that I would have to give up in order to do this kind of deal.

Smith said:
For what it's worth, "options" like this are usually instigated by the buyer. The person who is getting the option to buy at a future date (using an agreed-upon formula) typically pays the prospective seller to purchase that option.

Here are a few additional considerations...

Assuming you mean $100.00 and not $100k per month, what kind of offer are you looking at? Something in the range of 3k to 6k?

If that's the case, how much can you realistically increase the offer over 12 - 24 months if you keep working on it?
Click to expand...
Yes, I mean I'm only bringing in $100 per month net revenue if only going off of 1st purchase. However, current LTV gross revenue is 3.75x my ad cost.

With that in mind, I feel I can get to $4-5k/month in net revenue after 1 year.

Smith said:
This is especially true if you are relying on SEO and you're sitting on page 3. SEO is fucking hard... and it doesn't seem to be getting easier.
Click to expand...
If you're not an SEO expert, is there someone else here who can tell me how long it will take to get into the top 3 positions for KWDs that have a KD of less than 30?

Smith said:
Do you have any other projects you can flip that cash into if you were to sell now? How much money could you make doing that instead?
Click to expand...
Not really. But I would be interested in getting into something that has much larger revenue potential. The idea of buying an existing business would be exciting. However, I have no experience doing this and that alone would take time to research so I don't get hosed.

At any rate, going off my idea of having the option to sell to them down the line at different intervals, what kind of a multiplier would you use for net revenue per month? Or did you have a better idea of how to do a deal...and what would you ask for upfront?
 
Don't sign any stupid contracts.

They approached you to buy. Revenue has nothing to do with it when you're this early stage.

My opinion based on what you've posted here is that you should be flat out asking for five figures to walk and be extremely non forthcoming with details. This doesn't sound like a very good faith acquisition attempt and trying to do a cashflow valuations with turds acting this way is just them fucking you around fishing for information.

Tell them they can have the domain and assets for 10-100k and give them a check out link if you really think you can get something.

You don't need some contract for an earnings multiplier valuation. There are plenty of people willing to do those kinds of deals if you can hit your cashflow targets and grow to sufficient size. Those other people also arnt threatening you and trying to scope out your business while its in the hatchling stage.
 
I agree that revenue is not relevant.

At the very least we're talking grown people sunk cost, meaning, you're an adult who came up with an idea, executed and delivered. That is not free, cheap or easy or they would have done it themselves.

It's one thing to sell a small blog or affiliate site for pennies. There you know exactly what you've put in to it and its replacement valute.

It's something entirely different to sell a custom proejct. It's why I want to get into that in the first place. It's not as easy as money+time like with a blog.

Just going on serious grownup valuation of what matters the most in this world, executing on an idea with a custom solution. That just isn't cheap. It isn't a Wordpress blog. It's a custom IT solution, so pay for it.

Think about what the money will do for you if you sell, will it make a real difference in your life or not? If not, then don't sell.
 
secretagentdad said:
Don't sign any stupid contracts.

They approached you to buy. Revenue has nothing to do with it when you're this early stage.

My opinion based on what you've posted here is that you should be flat out asking for five figures to walk and be extremely non forthcoming with details. This doesn't sound like a very good faith acquisition attempt and trying to do a cashflow valuations with turds acting this way is just them fucking you around fishing for information.

Tell them they can have the domain and assets for 10-100k and give them a check out link if you really think you can get something.

You don't need some contract for an earnings multiplier valuation. There are plenty of people willing to do those kinds of deals if you can hit your cashflow targets and grow to sufficient size. Those other people also arnt threatening you and trying to scope out your business while its in the hatchling stage.
Click to expand...
Yes, they could be bluffing. But then again maybe they're not. If they aren't bluffing and put down a retainer for an attorney, then I'm guessing they probably won't be open to buying me out at that point. And I don't want to have to get on a plane and fly out of state to deal with this.

And while I could take their offer right now, it's not enough since their offer for my hatchling site reflects this. I know the biz will be worth more in 1-2 years and then I can sell it using a multiplier of net revenue of CLV.

At least if I guarantee I will sell the site to them in the next couple of years, it will get them off my back so I don't have to worry about them taking legal action. Plus, I will be able to sell for much more money once my site starts ranking organically. The only downside I see is not having more suitors for the biz once I decide to sell.
 
To recap...

1. You want more money
2. They said "lawyer"
3. Now you're signing a contract that guarantees you sell it to them in the future

... it sounds like you've already decided you have no power, no leverage, no other options, and now you plan on giving in to these fucking muppets before the first shot is even fired... they won.

The only mistake these guys made was contacting you so early... $100 per month doesn't seem worth it to anyone, not even a thief. They should have waited until you grew the site and then came at you with the muscle. Amateur thugs at best.

So what now? Well, if you're that worried about their lawyer (if there even is one), why not just sell it to them?

And after the sale is through, start a new site and don't fucking tell anyone.. not even BuSo... ever.

Go scale the shit out of the new site and then sell it to whoever you want... or keep it and just crush these assholes with a vengeance.

Final thought: You might get some value from a quote I once saw on BuSo...

“Be not intimidated...nor suffer yourselves to be wheedled out of your liberties by any pretense of politeness, delicacy, or decency. These, as they are often used, are but three different names for hypocrisy, chicanery and cowardice.”

~ John Adams
 
Legal action? For what - creating a website/company in the same industry? What's going on here dude.
 
CCarter said:
Legal action? For what - creating a website/company in the same industry? What's going on here dude.
Click to expand...
Ok...I used to work for them running their ads. And now they are obviously not happy I'm now a competitor.
 
finnegan said:
Ok...I used to work for them running their ads. And now they are obviously not happy I'm now a competitor.
Click to expand...
Now it all makes sense. You might have some legal problems especially if you signed a non-disclosure or non-compete agreement when you worked with them. It doesn't matter what really happened when you worked for them, it's going to be spun to look like corporate espionage and acting on privileged, insider information.

There's a part of me that says you should have never exposed who you were as the site owner to them. Another part of me thinks I'd probably just wipe my hands clean of this. The bigger your revenue gets and the more SERP real estate you take, etc., the bigger the problem is going to get.

I'd like to type some "warrior talk" and tell you to chop their heads off and blah blah, crush 'em, hold the line. But this new piece of information changes the game to where I'm not sure that's a smart thing.

They do have a legal concern here which means you won't be counter-suing for your legal fees after winning the first bout (if you win the first bout). At the earnings you're talking about right now, you'll go deep in the red if there's any legal battle.

Either selling it now or signing that contract that says they'll buy it in X amount of time both seem like a way out of this without enraging them. I'm not sure I'd keep working on it, hoping I can make SEO work in a year's time or whatever (versus PPC where you're eating into your profit margins significantly anyways and hurting your future liquidation value ). I don't see this as doing much for you other than being a headache and wasting your precious future time you could spend on a project that wasn't started on dubious grounds.
 
SEE... There is always something.

Fi0rIqu.gif

It's always the information that you don't reveal that tells the whole story. There is a reason you didn't reveal that part of the information. Whatever that reason is - that's where this guilt is coming from.

If you had said that from the get-go EVERYONE in this thread would have given you different advice - but you kept it secret.

This whole thread didn't make any sense - cause your moves didn't make any sense. A random person contacting me - I wouldn't have even replied. But they weren't random people - they were your past employers/people who paid you.

Ryuzaki said:
insider information
Click to expand...

It pretty much is insider information - dude ran their ADs!
 
I feel like that was some key information that should have been included in this post from the start. LOL

No wonder they're pissed and threatening lawyers. I was over here thinking why doesn't this guy just tell them to F off?
 
Ohhh @finnegan... what a ride this has been, huh?

You're so guilty you weren't even willing to tell the truth about what was happening on an anonymous internet forum, which is pretty funny considering you told the company (that wants to sue you) what you were doing.

It still doesn't feel like we have all the details... but it sounds like you fucked up. And if that's the case, you should probably wash your hands clean and go find another project.

Last bit of advice: You might want to consider signing a legal release with them, releasing you of any legal liability after you decide how to move forward.
 
I can recommend legal insurance to all business owners and @finnegan. It's like $50/month for me in the US with LegalShield and I can ask their attornies any question I have. If you're afraid of a lawsuit, legitimate or bogus, the $50/month is very comforting. The insurance also comes with 10 hours of trial time. They'd even write letters for you too. Much cheaper to have insurance than to pay $250 for a 1 hour consultation.

@finnegan, It'll relieve your nervousness about a lawsuit, since the lawyer can tell you if they're bluffing or not.

The service can also review contracts too as part of the insurance fee.

If you need more assistance, they refer you to their own attorneys. So the whole business is lead gen for them. Quite a win-win business model.
 
finnegan said:
Ok...I used to work for them running their ads. And now they are obviously not happy I'm now a competitor.
Click to expand...
ha ha
ur fucked.
Maybe next time you get a client don't decide to go be a shitty asshole to them.
 
finnegan said:
I'm curious though as to how another party could sabotage me by abstracting info about the biz. While I can see how giving out numbers like revenue could be useful to them, I don't understand how my company's info could be used maliciously against me. Would this involve legal matters of some sort?
Click to expand...
He was talking about himself lolololol
 
secretagentdad said:
ha ha
ur fucked.
Maybe next time you get a client don't decide to go be a shitty asshole to them.
Click to expand...
Just because a marketer has a client in a certain niche doesn't preclude him from later starting his own biz in that same niche. Unless that marketer signs a non-compete, that person should have the same rights as anyone else.
 
Yea, maybe... but you didn't think that would be useful information to share?

If you should have the "same rights as anyone else"... why hide it?

Better yet, why wait so long into the discussion to share the fact that the company coming after you was a former client?

This whole situation smelled off from the beginning... now it just smells like bullshit.
 
Smith said:
Yea, maybe... but you didn't think that would be useful information to share?

If you should have the "same rights as anyone else"... why hide it?
Click to expand...
Why hide it? Because I knew there'd be judgmental people like secretagentdad lambasting me for daring to open up my own shop.
 
finnegan said:
Why hide it? Because I knew there'd be judgmental people like secretagentdad lambasting me for daring to open up my own shop.
Click to expand...
It is controversial and you're a little devil, but look, because you did that, they're going to pay you to resolve the issue you caused. Capitalism is fucked up. It's like the guy who heard about Getir in Turkey, went to Germany and created Gorillas (the same company) and later sold Gorillas to Getir. lol.

Or that guy who was CEO of WeWork, made contracts as both the CEO of WeWork and the owner of properties leasing to WeWork. LOL.

The good thing is that this is just business. It's more fucked up when, for example, a cop pins a crime on someone innocent, just to clear up his backlog of cases and to make his chief look like a better police officer, since cases are being resolved, so that the chief can be re-elected again.

Welcome to the club!
 
You must log in or register to reply here.
Back