MOZ publishes guide website to valuation
MOZ columnist Greg Elfrink has publishes a guide website to valuation to help webmasters find out how to find the real value of their websites.
Elfrink says, “How businesses are valued is such a common question we get at our brokerage that we created an automated valuation tool that gives a free estimate of your business’s value, which our audience uses with all of their different projects.
At the heart of any valuation is a fairly basic formula:
You look at your rolling 12-month net profit average and then times that by a multiple. Typically, a multiple will range between 20–50x of the 12-month average net profit for healthy, profitable online businesses. As you get closer to 50x you have to be able to show your business is growing in a BIG way month over month and that your business is truly defensible (something we’ll talk about later in this article).
You might see some brokers using a 2x or 3x EBITDA, which stands for earnings before interest, tax, depreciation, and amortization”.
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