Who the fuck are Internet Brands? And why do they want my forum?

[Yaxxx]

The thing is, I'm making $20k/mo now. And I know I can double it in six months.
And probably double it again by the end of 2011.

If you're certain you can make $40k/mo within 6 months and have a strong chance of doing $80k/mo within a year then you'd be mad to sell for high 6 figs. Ofcourse it depends on the niche. 70% non-SE traffic is a big plus to your site also. Riskier, but a better pay-off. GL whatever you do.

 

[cucaloco]

They made a decent offer on one of the forums/communities I am a partner in about 2-3 years ago. We gave them all the data and it turned out to be about 6x yearly revenue. One major point of contention back then probably 60% of the revenue came from selling paid links.

Glad we didn't sell at the end of the day as revenue is up and the site is growing.

They wanted us to stay on for at least 1-2 yrs.

 

[Celtik]

What did you decide to do OP?

 

[bcc423]

They wanted us to stay on for at least 1-2 yrs.

What do you mean? Like work for them? For a salary or for free?

 

[bcc423]

What did you decide to do OP?

Haven't decided anything yet. We will be having the next round of talks with them on Monday.

 

[bcc423]

cucaloco, what about the non-compete agreement. Did they want you to stay away from that niche only or from forums/social projects in general? Did you get that far in your negotiations?

 

[dsiomtw]

They only ask that you don't directly compete in the same niche. Non-competes are pretty tough to enforce as it is, there's no way a non-compete that says you couldn't operate ANY forum would ever be enforceable in reality.

As others have said, these guys are serious business. If you don't sell to them you run a serious risk of them driving you out of business. Unless you have created something they can't duplicate, I would get the best deal possible and sell to them.

While your growth may be impressive and you have a "secret method" for growing your forum faster than most other forum owners, remember that they control 10s of millions of pageviews per day. They CAN duplicate your site and growth if they want to.

Keeping this in mind, realistically, your "secret method" for growing your forum is probably worth at least a little less to them as it is to you - since they already know that they can grow a forum (even starting from scratch if they have to). So maybe your site isn't worth quite as much as you're thinking now...

Bottom line ... if you say no and they enter your market you will have a VERY hard time just maintaining what you have now.

I'm curious why you're scared of starting a new project. You said you've had a bunch of little projects that didn't work out - were they other forums?

It seems like you should be able to replicate what you've done in other niches. If you don't think you can, then honestly, it sounds like you "got lucky" and you would be smart to take the money and run, and find something else you can get good at that CAN be scaled and/or replicated.

Just my opinion ... congrats and good luck either way.

 

[bcc423]

I'm curious why you're scared of starting a new project.

I've had successful projects in the past. And of course, I've had failures. I simply want some stability. And starting a new project is anything but stability.

Of course, if I pocket most of the money from the sale and spend $200-300k promoting a new forum, then I'll have something else to replace what I have now in terms of monthly income. It might not be the leader of the niche, but it would be paying the bills without me having to keep dipping into the rest of the sale money. So I'll be fine.

It seems like you should be able to replicate what you've done in other niches.

Yep, I'm pretty sure I can. At least, I know which characteristics to look for in a niche and how to get the initial momentum.

Keeping this in mind, realistically, your "secret method" for growing your forum is probably worth at least a little less to them as it is to you

It's not a secret method. I just don't want to expose to them my entire marketing funnel in that specific niche until I'm sure I'm going to sell.

They CAN duplicate your site and growth if they want to.

They can, but not by using keyboard monkeys who create fake accounts and talk to each other. I have something that beats that.

In any case, if they offer enough money then I'll sell. Otherwise, I would have to fight it out. Accepting a lawball offer just out of fear of being driven out of business isn't a good strategy.

Besides, they aren't the only game in town. One of the major players in my niche was bought last week for $1.6 billion. If push comes to shove, I'll start pitching to the established companies in that niche (as opposed to general media companies).

Thanks for the advice though.

 

[dsiomtw]

It all comes down to how sure you think you'll be able to hit your revenue targets, and if you want to take that risk.

Them offering close to 7 figs for a site that makes 20k a month is not a low-ball offer at all.

As you probably know, sites are generally bought and sold based on what they make now and what they have made in the past - not what they might make in the future.

 

[dsiomtw]

Oh BTW 200-300k seems pretty high to get a new forum/community off the ground. It depends on the niche of course, but I've found that generally speaking if you do it "right" the growth should be organic and viral and it wouldn't cost nearly that much. If you want to swap strategies, shoot me a PM.

 

[bcc423]

Them offering close to 7 figs for a site that makes 20k a month is not a low-ball offer at all.

Well, I don't agree with this. I don't mean to be arrogant about the offer, as it's certainly a lot of money. But a "site" and a "forum" are very different things.

Getting high six figures for a landing page about "how to run car on water" that was making me something like $1200/day in sales and then got nuked in one day would be a great offer.

Getting that same offer for a forum where close to 70% of revenue is coming from "regulars" is a totally different thing.

If we look at the current revenue of $20k/mo, 5 year multiple is $1.2M.
And if I can get it to just $30k/mo, it would be $1.8M.
to $40k/mo, it would be $2.4M.

I've had this forum for more than 4 years. And it's been growing non-stop from day one. There were some dips along the way, but overall it just keep getting busier and busier. There is simply no reason it won't continue growing at least well into the next year.

Here is a graph with the number of posts per day. What are the chances the forum with this dynamic will stop growing all of the sudden? BTW, for SEO, 6000 posts per day is at least 400 pages of content (at 15 posts per page). So you can estimate the growth of the content base of the site as well.

If you paid someone to create "articles" for you at $5/piece to go for long-tail search engine traffic, for 400 articles per day, it comes down to $2000/day worth of generated content. If we are more conservative and assume $2 per page, then it would be $800/day.

The only reason it's making me "only" $20k/mo is because I'm not milking it for all its worth.

 

[dsiomtw]

And if I can get it to just $30k/mo, it would be $1.8M.
to $40k/mo, it would be $2.4M.

Not overnight it wouldn't. A buyer will want to see a long history of the site making X before they offer Y, so even if you started making 30k/mo tomorrow it's not going to "worth" 1.8M any time soon.

If you can see yourself enjoying working with the site for years to come and are confident in your ability to continue growing it, then by all means keep it.

Personally I'd have to be really passionate about the subject to do that, which is why I asked if it's something you're passionate about earlier. If I were you, unless it's something you're really passionate about, I would seriously consider selling it and using the money to get into something you ARE passionate about (unless you're mostly just passionate about making money in which case it doesn't matter as much).

BTW if you want to talk to someone who turned down an offer from IB and later regretted it, let me know ...

 

[bcc423]

unless you're mostly just passionate about making money in which case it doesn't matter as much

This. I don't care about anything. Or rather, I care about software profiling, but I can't see myself creating yet another techie forum. There are way too many of them as is.

BTW if you want to talk to someone who turned down an offer from IB and later regretted it, let me know ...

I would love to. This is the kind of info I'm looking for right now. What happens if one declines the offer. And especially, how high were they (IB) really willing to go before saying "thanks, but we'll pass."

 

[wickedDUDE]

I disagree with the people who are basically saying sell, otherwise they are going to build a similar site and blow you out of the water anyways.

A forum takes years to build, not to mention the loyalty you have with your existing members. You've established a brand that is not easy to replicate.

If it could be done so easily, they would not even make you an offer in the first place.

Personally I would not give a site up that is making 20k per month. For somebody in that position, 800k just doesn't seem like a whole lot of money.

 

[tammysf]

I disagree with the people who are basically saying sell, otherwise they are going to build a similar site and blow you out of the water anyways.

A forum takes years to build, not to mention the loyalty you have with your existing members. You've established a brand that is not easy to replicate.

If it could be done so easily, they would not even make you an offer in the first place.

Personally I would not give a site up that is making 20k per month. For somebody in that position, 800k just doesn't seem like a whole lot of money.

^^ i completely agree with this.

i also have a forum that is doing pretty well and i would never sell it for less $x,xxx,xxx.00 the revenue is growing every month. it just doesn't make sense.

it is alot harder to get a forum up and running than just throwing $$ at it. it really takes a leader and great mod team with alot of dedication and passion to get it started.

 

[Unabomber]

I dont think you should sell unless you need money for back taxes or debt or something.

generally people sell their business when they are in trouble, legally, financially, etc.

if you want to like live a simple life, payoff your house, and live in the woods, i would sell..:>

Don't let fear, worry that things will change or the forum will go down.

even if you sell for 2 million, you wont make 20k a month interest.

you could buy something somewhat guaranteed like a gas station or something with the money that to me is a good reason to sell.

that is a okay reason to drop a .com. or buy an APARTMENT building.

at the same time selling isnt stupid or anything. but like I said people usually sell when they are in trouble financially, legally, or just fear of it gonig down in traffic, OR, its just too much stress.


I sold a site for 4 million but I hated the site..

also, arent forums like super super hard to build from scratch. the person who bought it makes a ton of money off it now. way more than I did.

if they arent, can you help me do one btw..

 

[Unabomber]

also once you sell and have money in the bank, I dont care if youre good at managing money, you will begin living off the money in the bank, and it will dissapear way faster

than if you keep your site, if you do sell, dont tell ANYBODY you have any money coming. not even your accountant until you know the son of a bastard isnt a sheister.

also if you sell you wanna structure it for taxes so you dont get ass raped in capital gain tax, but it should just be 15% i believe Obama extended it.

 

[bcc423]

Not overnight it wouldn't. A buyer will want to see a long history of the site making X before they offer Y, so even if you started making 30k/mo tomorrow it's not going to "worth" 1.8M any time soon.

Actually, they agree with me on this. They understand that when a site is growing, using a multiple of past earnings isn't the way to value it.

The problem is convincing them my business is stable without letting them see my complete traffic stats ahead of time.

also, arent forums like super super hard to build from scratch.

Yep, it ain't easy.

even if you sell for 2 million, you wont make 20k a month interest.

That's actually one of the arguments I made to their rep. He responded saying that it's apples to oranges basically. Money in the bank is one thing, a business is a lot more risk.

He is probably right, and I don't expect to sell for the amount that would instantly bring me $20k/mo in interest. But I would like to get enough so that I can at least live off of the investments until I get the new gig rolling. I most certainly don't want to live off of the money I would get for the sale. That money would disappear in a few years.

The more I think about it, the more I'm interested in knowing what IB does after being declined. Do they take over the niche by throwing lots of money at it? Do they take it personally and try to ruin you in the process? Or do they just move on?

If anyone has any experience, please let me know.

 

[ptpatil]

the interest thing with the 2 mil is not a valid argument, money now is worth more than money later, and 2 mil is not a small amount of capital to get started on other projects, which can bring you even more. I mean you made this forum without 2 million dollars to invest in it. With your experience and knowledge, imagine what you could do with 2 mil behind you.

 

[BluAffiliate]

Don't disregard the fact that these guys might step in and directly compete against you if you don't sell them your forum. You might be left with nothing you don't sell. If it were me I'd sell that forum and take what you've learned to start a new one since you've already proven that you have what it takes. The first million is the hardest.