Mon, 23 May 2011 | BUSINESS SALE
B2Media co-founder Duncan Riley has sold his Google News-approved blog website Inquisitr.com to an ‘unnamed Israeli media buyer’ for $330,000.
The website has covered general interest topics on tech, sport, entertainment as well as humorous stories since it was set up three years ago.
Inquisitr.com gets $15,449 in monthly takings from 1.4 million unique visitors as well as more than seven million average monthly pageviews. It uses pay-per-click, in-context text links and display advertising to bring in revenue from various advertisers.
Amongst the larger website-based business sales that have taken place in the past 12 months, those that focus on content and use advertising as the main avenue of income have been the most prevalent.
These types of businesses are very attractive to large buyers, who can bolt their acquisition onto their existing operations. Content-focused sites are the easiest to set up and run side by side with other websites. The transition to the new owner is relatively pain-free – employees are not transferred with the business, neither is there stock or premises. A huge advantage is that running a site with this model does not require much technical knowledge.
Inquisitr.com sold for a 21x monthly revenue multiple, which is at the higher end for smaller internet-only businesses for sale, many of which sell for around 12 to 18 month's revenue. Compare this with offline businesses which are usually valued somewhere in the region of 2 to 4 times EBITDA where they have annual turnover of up to £2m. Inquistr.com sold for only 1.8x EBITDA as it has a very small level of outgoings.
While many internet businesses are still undervalued and there are many opportunities to get very good value for your money, caveat emptor - there are pitfalls and traps peculiar to the online business marketplace. Ensure that you apply at least the same amount of due diligence on any likely internet business sale prospect as you would for an offline business purchase.
Subscribe to the Business Sale Report for guides on due diligence, plus useful tips and resources for buying online and offline businesses.
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