Monthly Archives: January 2015
A few years ago, I did a lot of reading on buying a website and (after a lot of web spam!) found some useful guides and articles on the subject. Most of these articles covered due diligence in great depth – checking financials, traffic numbers, domain ownership etc but none seemed to cover the more long term discoveries that often lead you to have buyer’s remorse, once you’ve made a purchase; you know the “oh crap…how the hell did I not see this happening” moments that are often more difficult to analyse in advance.
My bookshelf has an entire section of books on valuation. Even though I deal with valuation every day, I haven’t looked at any of those books for at least a couple of years. It’s just not a process you need reference books for. Most of the time, acquisition valuations can be done without a spreadsheet – many professionals will work out the valuation on a whiteboard or even a post-it-note.
Valuation is challenging because it’s based on the ‘type’ of company and the ‘quality’ of earnings. Growth rate, predictability and market conditions conditions are also significant inputs to the valuation process.