Advice needed from anyone who has bought or sold affiliate business...

[Wiganer]

Hi all, apologies for my first post asking for help but you guys seem the most knowledgeable around so hopefully i'm in the right place

Basically i've been an affiliate for the last 5 years in various fields and someone has just shown interest in buying my gambling affiliate sites, they wasn't initially for sale but i'm interested in a bricks and mortar investment so the cash injection has got me considering it, the problem is that neither me or the buyer know where to start with putting a valuation on the business or even if it's possible to sell.

Obviously i can't provide exact figures or stats but here's a quick insight into my gambling affiliate income, I only generally work with one gambling affiliate company and they're very reliable, i've always been on a 30/35% rev share.

2011: 300 new depositing accounts, 600 active accounts. £20k net profit.
2012: 500 new depositing accounts, 1100 active accounts. £100k net profit.
2013: 450 new depositing accounts, 900 active accounts. £150k net profit.
2014 (to august): 108 new depositing accounts, 700 active accounts. £50k net profit.

My last full month (July) stats are: 55 registrations, 10 depositing, 270 active accounts, 240 depositing accounts, with £6k net profit.

I have a total of 140 domain names that would be included in the sale, around 20 of them are active and getting decent organic traffic, between them i get approx 500 good quality unique visits per day.

On that info i basically have 2 questions if anyone can help me...

1. First and foremost, am i allowed to sell an affiliate account that is currently registered in my UK company name?
2. Secondly, does anyone have any idea of what it would be worth?

I would really appreciate any advice at all

[universal4]

The fact that 100% of the income comes from a single affiliate program greatly increases the risk, no matter who the program is.

Rick
Universal4

[Sherlock]

I can only say I would buy it for up to 120 GBP per active account (where active account is not active in 2014 but in Aug 2014).

If the active account number is roughly the same as in July, then my price would be less than 1 year income. What is the value is really hard to say. Internet projects/parking domains etc. are sold in range 0.5 to 5 yr revenue most of the times. Selling an affiliate account is definitely in the lower range because the question here is what is fishy with the account. I do not care what the seller will tell me, because I know it will be a bullshit. Nobody is selling golden goose. This is why I would be very conservative here.

The value of the affiliate account is determined by asymetric information that is known only to the affiliate account holder. Therefore the market price will be always well below.

[grem]

Which single affiliate account with this be? It is a great risk not having the diversity.

Do you have a list of sites?

[Jokerman99]

Given that you own 20 sites with an average of 25 visitors per day, the value of your network will be based solely on new first time depositors. Historical performance is a poor metric to look at. In your case historical performance actually represents a very serious decrease in value of you assets due to the plummeting new business numbers between 2013 and 2014.

You are averaging 14 new FTDs per month at the moment, so the value of your network would be somewhere in the region of:

14 x Value of CPA for that country/traffic source x Months (12-18 generally)

If this was UK sports traffic, I'd value your network at 14 x $100 x 12 = $16800. If it was casino traffic, probably 2-3x that.

Affiliate account valuations are extremely complex and as Sherlock alluded to above, you are unlikely to get an offer you would be happy taking.

[Moonlight Cat]

2011: 300 new depositing accounts, 600 active accounts. £20k net profit.
2012: 500 new depositing accounts, 1100 active accounts. £100k net profit.
2013: 450 new depositing accounts, 900 active accounts. £150k net profit.
2014 (to august): 108 new depositing accounts, 700 active accounts. £50k net profit.

My last full month (July) stats are: 55 registrations, 10 depositing, 270 active accounts, 240 depositing accounts, with £6k net profit.

Sorry, may be i miss something. Is this sports betting or/casino traffic?
For casino traffic income is too low. If this is slots/casino traffic i think you mast add
more affiliate programs for your sites or change existing.

[Wiganer]

Thanks to everyone for the replies and feedback, here's a few more points based on the replies...

• Although there's 20 active domains, 90% of the traffic comes from my top 3.
• They're all slots player accounts, the sites currently don't promote anything except slots.
• The main program is Sky Vegas, i've worked closely with them for nearly 6 years. I do have income from other programs too (william hill, coral, ladbrokes, kerching and virgin) but the combined total of all those is only around 5k gbp per year.
• The main reason it looks like the income has dropped this year compared to 2013 is because in that year i had 2 Whales last year, both of which lost over £60k each in one weekend then disappeared. So that contributed around £40k to my earnings. Taking that into account the last 3 years will all be roughly £100k profit (based on the rest of this year being steady).

The buyer is actually an acquaintance of mine who i've known for 4 years and also worked on his websites with him. It was him who approached me asking for a price, until then i'd never even considered selling up.

In all honestly i was expecting over 6 figures (not 7 though lol), am i being over optimistic?

Thanks again.

[Jokerman99]

Asking 6 figures for a network sending ~130 FTDs per year is extremely optimistic. If it includes the affiliate accounts it might be more achievable but it would be a gamble on the part of the buyer.

I'd be interested in buying the sites only @ £30,000 or so.

[Wiganer]

Asking 6 figures for a network sending ~130 FTDs per year is extremely optimistic. If it includes the affiliate accounts it might be more achievable but it would be a gamble on the part of the buyer.

I'd be interested in buying the sites only @ £30,000 or so.

The sale would include 120 parked domains, 20 active websites plus the transfer of my affiliate account and all players to the new buyer, also a few other bits like facebook pages and a youtube channel with 600+ videos and hundreds of subscribers.

[Jokerman99]

A website with no traffic is close to worthless. Active websites with traffic that generates new depositors are worth something, as discussed earlier.

The domains may or may not be worth something. If you own slotsonline.co.uk or playslots.org you may have real estate with value, but each of those would have to be valued individually. Owning 120 parked domains that are worth registration fee wouldn't be of any appeal to many potential buyers.

The Youtube channel and Facebook pages may be of some value again it's hard to say. If they are communities with active members that generate new business then they would be of higher value. If it is a random facebook page with 1000 likes and no interaction then it doesn't have alot of value.

Personally speaking as a buyer I'd be prepared to pay ~30k for the websites based on the provided stats. Another buyer may pay more. Likewise you may find a buyer willing to purchase the affiliate account for what you consider to be a good price.

I've simply tried to give an unbiased look at how one would value the things you are selling, at least from a buyer's perspective.

[Sherlock]

Thanks to everyone for the replies and feedback, here's a few more points based on the replies...

• Although there's 20 active domains, 90% of the traffic comes from my top 3.
• They're all slots player accounts, the sites currently don't promote anything except slots.
• The main program is Sky Vegas, i've worked closely with them for nearly 6 years. I do have income from other programs too (william hill, coral, ladbrokes, kerching and virgin) but the combined total of all those is only around 5k gbp per year.
• The main reason it looks like the income has dropped this year compared to 2013 is because in that year i had 2 Whales last year, both of which lost over £60k each in one weekend then disappeared. So that contributed around £40k to my earnings. Taking that into account the last 3 years will all be roughly £100k profit (based on the rest of this year being steady).

The buyer is actually an acquaintance of mine who i've known for 4 years and also worked on his websites with him. It was him who approached me asking for a price, until then i'd never even considered selling up.

In all honestly i was expecting over 6 figures (not 7 though lol), am i being over optimistic?

Thanks again.

Yes, you are too optimistic, IMO.

Imagine that the proposed 14 months revenue is something for what parked domains are being sold. But the 14 months revenue (~125K) here is supremum.

1st of all the whales are missing
2nd this is not as steady business as domain parking
3rd domain parking stats are very easy to proof and there is almost no possibility to cheat unlike as here (I am not telling you are cheater, but I hope you get the point that the probablity must be always counted in)
4th the traffic is never just passive traffic generating a passive income like typein traffic, there can be some change in system connected with organic traffic and the change will be likely down and not up

This is why I would never buy it for 14 months revenue, but for much much less. (and I buy selected domains for 2.5 yrs revenue, so I do not think I am not generous)

[TheGooner]

Possibly the best comparison is to look at small businesses in the real physical world like Cafes, Restaurants, Newsagents etc, that are effectively owner/operators with minimal real branding value and which work simply through the efforts of the owners.

Just like websites they have lots of business risks, including minimal protection from competition, they will rise and fall with the market, and need regular owner input in order to make profits. These sort of real world businesses are advertised for sale regularly and sold for around 1 x annual net profit.

If your website collection / existing affiliate accounts is showing steady month by month profits then it would be reasonable to assume that you could achieve a sale price of around 1 x annual net profit (revenue - costs) + any assets (cash/computers?)

Costs should include actual costs incurred (hosting, reg fees, advertising, links?) and also a provision for hours worked by owner (or employed staff) at (say) £20 per hour. Why the hourly rate charge? Because new owners are buying profits - not a hourly job - and may not have the time to do all the work you currently put into the business.

Things that will drive the sale price down :

1/ Lack of preparation of business for sale.
Do you have an owners manual?
Are all the basic weekly processes/procedures documented?
Are usernames/passwords, affiliate URL, website CMS details recorded.

2/ Lack of business structure.
Are the affiliate accounts registered in the business name so handover is easy?
Are the affiliate payments going into business accounts which will handover with sale?
Or is it all messed up with personal accounts so all the details will need to be changed?

3/ Lack of stable earnings.
Real world business earnings are attributable to effort - and generally there is some stability from month to month. You've suggested that the £150K annual revenue (profits?) was a 1-off result and you expect around £100K revenue per year. Is that around £8K each month - or does it fluctuate wildly from (say) £2K to £12K.

Do you have good earnings at multiple affiliate programs? Or just one? If you are mainly earning at one program then there is a business risk that your main partner may change their model - reduce percentages - reduce markets - or just stop altogether. Sounds unlikely? Ask affiliates of FullTilt and PartyPoker. Or various companies bought out by SportingBet which subsequently closed affiliate programs.

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By not paying attention to these business issues, you limit the number of people that you can sell to. And if there are not many potential buyers then there is less demand for your affiliate website business and so the potential sales price drops.

The upshot is that while running an affiliate website CAN be a business, run professionally, and set-up properly, the truth is that MOST affiliate websites are not - and so they will under achieve when it comes to negotiating the sales price.

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If you have good stable profits at £100K, earning well at multiple partners, and have all the business stuff in place then YES - you can achieve something close to a £100K payout.

If it's still run out of the bedroom, does not exist as a separate business, does not have annual accounts, does not even have separate bank accounts ... well then you are sending a lot of BUYER BEWARE signals and prices of £30K - £50K might be as high as investors want to go BECAUSE they will have to put things in place when they take over.

Of course - that's just my view.

[Wiganer]

Thanks to everyone for the detailed and very informative replies, i really appreciate the time and effort and it's helped me a lot in deciding what to do.

Basically i've taken from it that at a push i should be asking for 100k and in all honesty as that's my projected income for the next 12 months i probably won't end up selling as it doesn't make financial sense. I'm confident that the sky program is for the long term as they're currently one the leading sites for the type of slots that i target and they still carry on getting exclusive slots licensed so there's no reason my earnings won't continue for many years to come.

The business is fully legit and UK VAT registered too, it's all registered under my company name so the profits are even available publicly, i think I've just worked too hard on it over the last 6 years to let it go for 12 months income, or less as some are suggesting.

With an average of 350 regular depositing accounts each and every month for the last 3 years it seems steady enough for now and although the earnings can vary widely from month to month i've never earned under 5k in a month and i've just had one of my best weekends for nearly 2 years, even traffic is up by 25%.

Thanks again for all the help and apologies for not responding to the private messages, i'm not allowed to send a PM until i've got 10 posts on here.

[indepthstats]

I think maybe you're over thinking this. Especially given that you're dealing with a friend/acquaintance.

Just look at the past income, think about how the business is doing (only you really know) and come up with a price you'll be satisfied with in order to part with the income and potential future income.

Be fair, but don't sell yourself short.

Then take that number to him, tell him why you think it's fair, and see what he says. If he passes, you're no worse off than you were. If he takes it; great, it's a fair price.

The only asterisk I would put on this, is before you do anything make sure the affiliate is able/willing to transfer the account to the new business owner. That would be a disaster if you already had the deal in place and they refused.

Good luck with your transaction.