How to Appraise a Website

Stuntdubl:

If you own a website, you should understand how to buy or sell one. Buying and selling is at the basis of any viable business. The web business sure has changed the ways of thinking about business with wild valuation, deals with incredible return, and everything in between. During the first dot com bubble, ALL rules of business somehow magically flew out the window. There was a sense of urgency during the first bubble to “get in on the ground floor�?. Even pet food was going to be sold online by sock-puppets! Hindsight is 20/20, and a lot of the promise of the web that was founded on business principles is returning after confidence has returned. Now investors are more skeptical, owners are more savvy, and everyone still wants to get in on the promising ground floor.

There are two main ways I can see to value a website:

1. Cashflow (profit/ revenue) multiples
2. Value of re-creation