Domain Name Wire – Expert Discusses How to Sell Developed Web Sites
Domain Name Wire
How to sell your established web site — and how much you can get for it.
By Andrew Allemann
Wednesday, September 29th, 2010
One of the more interesting sessions during the recent Epik Developers Conference was about selling developed web sites. David Fairley, who operates a web site brokerage, explained the fundamentals of buying and selling established sites.
A discussion at Elliot Silver’s blog yesterday reminded me that I needed to follow up with Fairley for a story.
Fairley has had a lot of success buying, building, and selling web sites for himself and clients. One of his early successes was Hammocks.com. He had an online hammock web site, but then had the opportunity to buy the Hammocks.com domain for about $11,000. He bought it, enjoyed the SEO benefits of the domain, and sold the site to NetShops in 2002 for just shy of $1 million. Another big success was Strollers.com, which he sold for six figures.
In his presentation at DevCon, Fairley laid out seven fundamentals that developed web site buyers care about:
1. Cash flow the site produces (net profit or EBITDA)
2. Organic SEO rankings
3. Traffic stats
4. Cash flow and traffic trends (is it growing?)
5. Business model (ecommerce, dropshipping, affiliate, ppc)
6. Domain name (high quality generics add some value)
7. Average sale on your site
Fairley’s clients are mostly sophisticated buyers such as high net worth investors and people from the private equity world. They’re looking for cash flow businesses, and the typical sale is for 2.5-3 times the trailing 12 months EBITDA (earnings before interest, taxes, depreciation & amortization). Multiples can go higher, especially if the site is growing. Fairley said that most of the sites he sells have been around for 3 or 4 years or more.
His brokerage only deals with sites making at least $20k profit over the trailing twelve months. However, he is relaunching his web site with the ability for people to self-list web sites they have for sale. This may give owners of smaller sites a way to reach buyers.