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Old 09-17-2005, 01:07 PM   #9
Steve_S
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Join Date: Aug 1998
Location: Las Vegas, Nevada, USA
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WOW! More thought provoking questions. This thread should definetly go in the Archives. Great stuff

Assumptions: We are talking about mid 5 figure or 6 figure deals for developed sites. We have placed the "due dilligence" issues off to the side with the assumptions that the basic numbers and data are valid. We are dealing with known sites which in fact have a "brand" and occupy a leadership position in a given niche. I'm not a CPA "bean counter"

My thoughts in no special order:

1. This is not a scientific calculation. Inside every one of these deals you will find a monetary payment for "good will" which often relates to just how anxious a given buyer is to enter a given niche, the synergy that a given property may provide their current portfollio of services and or properties, the current state of the net economy, the cost to the buyer if they were to attempt to start from a zero base and hope to reach the same level as the site for sale, and a subjective calculation down stream (say 5 years) as to the monetary impact that a given property may provide the buyers current holdings and anticipated holdings.

2. As smart geek FH pointed out, you need specific cases and details on a specific site to really drill down further but the principals which all of us are talking about have great value. The best I can do is talk about the public stuff you can see about a given firm and hopefully this will help illustrate some of my subjective thoughts:

Carefully study the acquasitions of: http://www.inetinteractive.com/

It's reasonable to assume that early in the acquasition phase of inet they would infact pay more for "good will" than they would when their portfollio was already filled with sites. Along comes a new firm who wants to acquire a similar niche, and they pay more for "good will".

3. The membership issue with respect to Forums: I think it's a secondary consideration and I would never use it as a primary metrix. We start with and pay attention to uniques, pageviews, and a RPV calculation and a multiyear pre tax net revenue average. Why? Lurkers (non members) click banners and join your advertisers programs, lurkers, generate PageViews, lurkers spread the word to others. Quality Communities in a desirable niche normally produce this stat: only about 1 out of 8 uniques ever join and post. I see no benifit in drilling down to a given member who posts a lot verses another type of member and or lurker. They all generate uniques and page views which equates to RPV. I just lump them together when I try and compute the Communities "sticky factor" which starts with the average number of PageViews a given unique generates. Quality Communities in a desirable niche generate an average of about 12 pageviews per unique. Please remember I have my buyers hat on when you read my thoughts.

4. The membership issue with respect to the career/job sites and many other types of desirable niches including those very very very rare Quality Forums:

My comments could be taken as "harsh" and or insulting. Thats not my intent. This is a brass tacks pragmatic evaluation and I'm NOT referring to "you" or anyone else who cares to read this thread. My appolagies in advance if you find my comments insulting

a. ALL active members have what I call a "usefull life" <gulp> They join and are active and then they go away for perfectly understandable reasons. They stop generating uniques and pageviews. They still spread the word and thus provide viral growth and enhance the "brand", and produce new active members which some would say, replace them.

b. Given the transitional/temp nature of active members, it makes using them as a primary metrix for a sites value of questionable value. On the other hand, if I given site is able to effectively sustain the acqusitioin of new active members then you have value but IMHO, it's not in the members cat but goes back to a reasonable growth pattern which is reflected in a multi year evaluation of uniques and page views. <wew>

HTH
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