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Domain Discussion
Domain Industry Companies
Selling High Value Domains - Part 9
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<blockquote data-quote="ParkLogic" data-source="post: 2210376" data-attributes="member: 322544825"><p><img src="http://whizzbangsblog.com/images/easyblog_images/30069/Year2014/2e1ax_default_frontpage_20140203_businessmodel.jpg" alt="" class="fr-fic fr-dii fr-draggable " style="" /></p><p>At a recent webinar I had an interesting question asked of me, “Is it better to develop a domain prior to selling?” My immediate response was, that depends on the buyer. Although this is true I thought that it would be worthwhile unpacking this a little further.</p><p></p><p>I like to get back to business basics to more fully understand what developing a domain out actually does to valuations. In order to do this you need to fully consider the impact on both the P&L and the Balance sheet.</p><p></p><p>Let’s imagine that I think that that the domain I’m wanting to sell is worth $10,000. I then decide to build this domain into a business. At the beginning of the business the balance sheet has an asset in it that is worth $10,000 and the P&L hasn’t changed (ie. $0).</p><p></p><p><a href="http://whizzbangsblog.com/component/adagency/adagencyAds/click/5/4/7" target="_blank"><p style="text-align: center"><img src="http://whizzbangsblog.com/images/stories/ad_agency/4/1399459278.jpg" alt="" class="fr-fic fr-dii fr-draggable " style="" /></p><p></a></p><p>If after six months of work I manage to generate $50,000 in sales with a cost of $30,000 then the P&L has now changed to having a profit of $20,000. This is then effectively retained earnings as an asset in the balance sheet.</p><p></p><p>Now I want to sell the domain. Hang on a second, you’re actually not selling the domain, you’re now selling a business. If you can maintain the run-rate then you’ll generate $40,000 in profit by the end of the year. So typically you will sell the business on a multiple of profit which will also take into consideration the assets controlled by the company (eg. the domain name).</p><p></p><p><a href="http://whizzbangsblog.com/easyblog/recent-blogs/entry/selling-high-value-domains-part-9" target="_blank">Read More</a></p><p></p><p><a href="http://whizzbangsblog.com/easyblog/recent-blogs/entry/selling-high-value-domains-part-9" target="_blank">Continue reading...</a></p></blockquote><p></p>
[QUOTE="ParkLogic, post: 2210376, member: 322544825"] [IMG]http://whizzbangsblog.com/images/easyblog_images/30069/Year2014/2e1ax_default_frontpage_20140203_businessmodel.jpg[/IMG] At a recent webinar I had an interesting question asked of me, “Is it better to develop a domain prior to selling?” My immediate response was, that depends on the buyer. Although this is true I thought that it would be worthwhile unpacking this a little further. I like to get back to business basics to more fully understand what developing a domain out actually does to valuations. In order to do this you need to fully consider the impact on both the P&L and the Balance sheet. Let’s imagine that I think that that the domain I’m wanting to sell is worth $10,000. I then decide to build this domain into a business. At the beginning of the business the balance sheet has an asset in it that is worth $10,000 and the P&L hasn’t changed (ie. $0). [URL='http://whizzbangsblog.com/component/adagency/adagencyAds/click/5/4/7'][CENTER][IMG]http://whizzbangsblog.com/images/stories/ad_agency/4/1399459278.jpg[/IMG][/CENTER][/URL] If after six months of work I manage to generate $50,000 in sales with a cost of $30,000 then the P&L has now changed to having a profit of $20,000. This is then effectively retained earnings as an asset in the balance sheet. Now I want to sell the domain. Hang on a second, you’re actually not selling the domain, you’re now selling a business. If you can maintain the run-rate then you’ll generate $40,000 in profit by the end of the year. So typically you will sell the business on a multiple of profit which will also take into consideration the assets controlled by the company (eg. the domain name). [URL='http://whizzbangsblog.com/easyblog/recent-blogs/entry/selling-high-value-domains-part-9']Read More[/URL] [url="http://whizzbangsblog.com/easyblog/recent-blogs/entry/selling-high-value-domains-part-9"]Continue reading...[/url] [/QUOTE]
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Selling High Value Domains - Part 9
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