Internet Business Guide

Internet Business Guide Review

Update 4/08/08 Seems it has been awhile since updating the purchase multiple range for the Drop Shipping Internet Business Opportunity category. Not neglect, simply this range has remained stable through the ups and downs of the market. Even when the market turned from Seller’s Advantage to Buyer’s Advantage in June of 2007 this category remained stable. Has that now changed? Yes, but only slightly. The reason is the category is broken into two subcategories. The new category is sites that are less than eighteen months old; or have changed ownership in the past twelve months. The multiple for this category is 1.2 to 1.7. The initial category remains 1.5 to 2.5 for the 100% Drop Shipping Internet Business category.

Update 4/23/06
1.5 to 2.5 is the current multiple of ACF when buying an E-commerce “drop shipping” based business.

This article refers to a “buyer” acquiring an E-business. This is quite different than an “investor” buying an E-business. A buyer’s focus is on the historical information to determine value. An investor’s focus is on the future of an E-business to determine value. An investor focuses on a “future” multiple of revenue or profits. A “buyer” does not. The “value” of an E-business to a “buyer”, as with any other type of business, is based on a “multiple” of “revenue” or “adjusted cash flow” (often referred to as Seller’s Discretionary Earnings, or SDE). To determine the “adjusted cash flow” (SDE) you review the historical expense of the business to determine what costs are at the “discretion” of the owner. Some examples of discretionary costs of an E-business are auto payments, health insurance, trips to Jamaica (wink), cleaning services (the housekeeper is NOT a required expense of a business) and long distance phone expense. These “discretionary” expenses are “added back” to the profit side of the E-business.

Once a buyer has determined this “adjusted cash flow” he can apply a “multiple” to assign a purchase value to the E-commerce business.

An E-commerce business that sells products that are drop shipped to customers by a 3rd party, and retains no or little inventory, is valued at a premium compared to a direct marketer using other media (e.g. TV infomercials and 800 numbers). The multiplier ranges from 1.5 to 2.5. Time in business, extent of competition, and repeat customers are key determiners that affect whether the value will be at the low, or high end of the range.

Read More About Drop Shipping
Part One: Drop Shipping | Internet Business Review
Part Two: Drop Ship vs. Affiliate

For more information on a drop shipping Internet Business Opportunity, or more than 400 additional Internet Business Opportunities, contact Business Broker Don Janke. With over 20 years Online/Internet experience I can guide you to your ideal acquisition to make money online!

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5 Answers You Want To Know Before Making An Offer

1. Which Seller to buy from to get the best price to value.
2. What the real visitor count is to a web site.
3. What to say to guarantee that the Seller will carry back a note.
4. Which one website has the absolute best Internet businesses for sale. (not Internet Business Guide
5. You should think about this one. We have 90 minutes to explore your questions. It is best to establish a written list of your questions prior to the consultation. The questions may be as broad, or specific, as you desire; including a review of a business you want to buy. Reserve Now!