valuation of website based on its ads?

[IowaSkinsFan]

I'm not sure about this, but I think a standard offer for any business is four times its yearly net profit.

[BennyLaRue]

I'm not sure about this, but I think a standard offer for any business is four times its yearly net profit.

You might be thinking of the 10x valuation rule. It's something that has been a rough guide in land-based business valuation, rental properties in particular. Like most rules of thumb, it suffers from a lack of context and I don't think it translates well into web-based businesses anyway for various reasons, chief among them intellectual property and domain-name valuations.

But yeah, Gabe, Ash is right. Without understanding the business and its books, it's tough to come up with a fair value. You'd probably be better off to say to the owner that you're serious about making an offer and would like to understand more about the site's traffic and financials before coming up with a number that suits you both. Be prepared with specific questions of what you would like to see. If the current owner is professional at all, he or she will be happy to comply. If they have zero interest in selling, you'll know right away and save yourself some time.