How do you value a forum?

[JBS]

What are the general guidelines when buying or selling a forum? I know it's whatever someone is willing to pay, but what is a good starting point? I have heard some people talking about some basic formulas on revenue and unique visitors, but I can't seem to find any of those threads.

 

[PalePhoenix]

That's probably because there aren't any. At least, none specifically devoted to this. I'd write an article, but I have little more than marketing generalizations to offer. We've seen a few threads on TAZ lately, that mention the purchase or sale of a forum, but it's often unclear if these people are trying to put a price on something they don't seem to understand, or attempting to avoid buyer's remorse with community coddlings.

Whatever the reason, you will see a lot of material around the web that will tell you one thing or the other about basic domain sales, but very little about the financial transaction of a whole online community. That's because forums don't so much represent products as people, and it's how the buyer generally regards those people that affects the final price. Negotiations can certainly include all sorts of juicy factoids and data analyses, but it's ultimately something to be done carefully and plenty of forethought.

When you're talking about a parked domain, or site with nothing on it but an address, then it's usually worth exactly what you paid for it...unless someone's got a better idea than you do. AcmeWhatsis.com may be worth more than AcmeWhatsis.net or .org, etc., but if you registered an obscure domain without much of an idea behind it, then you're starting below zero. Someone else can come along with a multi-million idea, but pay you twenty-five cents for the URL.

Some say if you have a catchy name or a shorter address, there's an increase in value but, again, beauty is in the eye of the beholder. It's when you start putting stuff ON the site that the worth might begin to rise (it can also drop precipitously). Few companies are going to fork over anything for a blog, for instance, but if you write well and your content is relevant to an established site, then you might be in luck. Then, they're not so much buying your site as buying you, funding your continued musings so they can bring material to their own subscribers.

When a board is in play, circumstances change. So you've got 5000 members? Brilliant! But only a hundred of them are active, a thousand lurk, and none of them click on ads? Better rethink your proposal. Still, it's a matter of what those people are worth to someone else. Let's say you're approached by a content peer during a particularly low moment, and he or she wants to "merge" your two forums. You've got fewer members, but you're giving up creative control and basically turning your members over to their new landlord. Money should change hands here, but how much?

You will usually have no way of knowing what the other person likes or wants about your board, short of him or her telling you outright. Of course, if you've got lots of members, all with clever and engaging blogs/posts/galleries...well, you should know to up the ante a bit. Ten bucks? Fifty? A hundred? As they say of new artists, "You're paying for the frame." If you invested in a license, or anything like advertising and graphics, then you might try to recoup these, but you're still auctioning off a whole mess of real, live humans, and might want to be sure this is in their interests as well.

Some forums change hands without their constituents ever knowing. It's very business like, on the front end, and the backroom deals usually sound more like, "I'll take some money to get this headache off my hands." You can't have sour grapes if the buyer turns around and makes into something phenomenal. In that particular way, it's like real estate. The property is improved, so the value goes up, but really it's like selling the whole village.

If you ever see a "basic formula," on TAZ or anywhere else, then take it with a whole shakerful of salt. If you can be clinical and calculating about the transfer of ideas, feelings, community spirit and a sense of commitment from hundreds of people, then you might not have been the right person to run a forum in the first place. People get antsy enough when a mere thread is closed. One should always bear those consequences in mind when the rumors begin that a site might change hands.

 

[SoccerMan]

If I am selling, I use a simple supply and demand sample. I put it up for sell on a couple of sites and see what people are willing to pay for it. If I wanted to buy a site, I would research similar sites for sale and see what they are going for.

 

[Anat]

There is the factor of how much the forum is making. If someone makes you an offer and it's below what a forum will make you, say in six months, you're not very likely to take that. I am not saying that profit or revenue are the only parameters, not by a long shot, but I think if a forum is generating revenue you have a stronger basis there to negotiate from.

 

[SoccerMan]

Of course. The people looking to buy your forum value that in. If they feel they can make the same amount it adds value. Last time I attempted to sell my forum, I valued it by adding all revenue I make from it. Everyone that placed an offer valued it completely on what they could make from adsense. Apparently they were not willing to do a little work and keep the current sponsors. The point is, all it is worth is what they were willing to pay. Not what it is worth to me.