The last 6 weeks have been quite a shock to most Americans and people around the world. The economic upheavals have been monumental and without precedent. In our business as website business brokers, we have seen multiple deals fall apart or not move forward as a result of the uncertainty and fear in the marketplace. Of course, in any economic swing there will be people and businesses that reap massive profits and actually thrive. However, the vast majority of people and businesses feel the effects both financially and emotionally as a result of the meltdown on Wall St and now Main Street.
In this climate, there are definitely more sellers than active buyers in the internet business sales and acquisition field. The point is - is that there are buyers! These buyers are being extremely selective and cautious and are literally cherry picking the most attractive website business opportunities available providing the price is right. Sellers with online business opportunities that are stable or still growing despite the economic malaise because of the niche they are in, stand the best probability of consummating a deal in this period. The other sellers that will succeed in closing deals will be those that are more aggressive with their selling prices.
Just like in real estate, the seller that drops his price lower than the rest of the market gets more attention and sells quicker. If you hold out too long for a premium price or average price in volatile markets, you can find that you wind up selling for much less in the long term if things get even rougher.
A year ago, the average multiple on an average website business with solid fundamentals was 3-3.5 times the net trailing 12 month profit. In this global financial crisis, average sites are tending to be moving if they are priced between 2.0 - 2.5 times the trailing 12 months all cash at close. The selling price may be higher if more owner financing is involved, which, with the current credit crunch, has become more prevalent. The risks of a further down turn are tangible, so buyers are factoring this in when making offers. As I mentioned earlier, there will be lots of good deals to pick up for buyers with good capital reserves but buyers needing financing are just not able to secure the funds to get a deal done currently. The best opportunities will still get a better multiple on their business because they are able to thrive in this environment, but the pressure from the market means that it is a buyers marketplace and sellers will need to adjust their price expectations if they want to get acquired. The other choice is simply to ride this out and hope there is a quick turnaround later in 2009.
David Fairley
President, www.websiteproperties.com
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August 23. 2010 01:13
now a days there is uncertainty and fear in the market and second reason is there is few buyers and more seller in this sense the market value is going down lack of seller become online business down the best opportunity to get multiple of their business
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August 24. 2010 23:06
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August 25. 2010 00:34
here you discuss about the tough economy also influence on online business uncertainty and fear in market make the market down its really alarming factor another reason of down fall of market is more seller and less buyer for this reason the market is going down but i think in this sense take some positive step to remove uncertainty and fear from market
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August 25. 2010 22:02
it has been observed that the business of websites is up-healed because of so many reasons first there is uncertainty and fear in market because of unstable economy condition second there is more sellers and buyers because of low buyers the market is going automatically down in this sense internet market and brokers should take positive step to remove fear and uncertainty from market
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August 26. 2010 00:20
its really worrying situation for the internet brokers and the internet market that the market is going down now a days because of economy unveil situation to think the buyers to invest where there is more sellers and less buyers the market value obviously go down in this sense some reforms are required to boost this business
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August 26. 2010 21:45
as you mentioned that the last 6 weeks the online market is going down because the unveil situation of economy the fear and uncertainty is creating among peoples they have no visible situation of market value for this reason there is few buyers and more sellers this can also become circumstances to bring the market down in this sense different possible steps be taken to get rid of this situation
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August 31. 2010 00:50
this post tells that the tough economy really hurted the online market it bounded the people for buying point of view because the factor of uncertainty and fear is developed among peoples for this reason the online market is disturb on huge level the online brokers and market should think about to take positive steps
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September 6. 2010 02:12
The opinions expressed herein are meant to provide information based on the personal experience of each broker posting to this blog.