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Old 09-16-2005, 08:43 PM   #7
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Join Date: Aug 1998
Location: Las Vegas, Nevada, USA
Posts: 5,224

Originally posted by Rivux
... As for the member type, I would be interested in discussing specifically career/job site memberships. The numbers I quoted above were from discussions with some recruiters and job site owners and what they felt an established member database was worth to them. Ive been part of companies in the past that have sold career sites and a large portion of the sale price was based on the membership, which is something I assumed was normal for all types of sites. But from this discussion so far, it seems that some niches don't value members in the same way.
1. I agree with smart geek FH about this type of site.

2. The additional value (beyond RPV) in members definetly does not apply to all types of sites. For example, lets look at Forums: full of dormant members, sometimes the owner trades memberships and posts with other Forums which is not organic and of little value if any value long term, sometimes the seller manipulates the membership numbers to pump the sale, and in the case of Forums, non members/lurkers generate revenue for the seller.

3. On the specific type of sites you mentioned: yep, like FH said, the high end of the scale, a rather steep barrier of entry/acquisition cost, supported by a site with quality content/listings which is original and not stolen so if it pases the due dillegence test then it in fact does increase the value above and beyond the rather typicall annual pre tax net times 1 or 2.

4. Due Dilligence from the buyer:

- TOS for membership and can I monetize and or cross promote under these terms
- The script that runs the joint Can I use Admin to see frequency of visits from a given number of members.
- If the mailings to members promote content on the site, do I see a "spike" in real traffic from these mailings.
- Natch, I'm going to silently sub to the membership and see what happens.
- I'm going to spend time in G (including Newsgroups), IA, etc and see if I can independently verify a normal growth pattern and the longer the site has been on line (we start at over 2 years) the more value I'm going to place in certain parts of the deal and the more "comfort" level I will have.
- I will definetly place Alexa,ODP (cough), and PR at the very bottom of my list. These metrics are easily manipulated, and in a real deal they just normally snap into place. If one metrics like Alexa is way better than the real traffic and source of same annalysis from real logs, then we have fraud and thats a deal breaker and quite common in smaller deals.
- Their has to be some demonstrated and legit revenue generated from the sellers membership traffic. As a buyer, I may see much more revenue potential than the seller does and those are the kind of deals a lot of folks like me like very much
- Income that a seller may state is often false, inflated, understated, overstatred, fraudulent, or they keep lousy records. Their are numerous cross checks on this. Just a few: deposit slips, copy of checks, making sure I'm viewing a "revenue report" which only includes numbers for the site I'm buying, certified copys of tax returns with the SS number redacted, copy of the refund check from the IRS or the money due check to the IRS, and a few more things which my tired old brain can't remeber.
- And many of the procedures I mentioned in my first post in this thread.



Last edited by Steve_S; 09-16-2005 at 08:43 PM.
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