How is the true value of an online business determined?

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How to value a business is such a common question we get at our brokerage that we have created an automated valuation tool that gives a free estimate of the value of your business , which our audience uses with all their different projects.

At the heart of any assessment is a fairly basic formula:


You look at your rolling 12-month average net profit azerbaijan number data and then multiply that by several times. Typically, a multiple for a healthy, profitable online business will be between 20-50x the 12-month average net profit. As you get closer to 50x you need to be able to show that your business is growing exponentially month over month and that your business is truly defensible (which we’ll talk about later in this article).

You may see some brokers using 2x or 3x EBITDA, which means earnings before interest, taxes, depreciation, and amortization.

When you see this formula, they are using an annual multiple, while at Empire Flippers we use a monthly multiple. There really isn't much difference between the two formulas. It's mainly down to your preference, but if you're brand new to buying and selling businesses online, it's helpful to know how different brokers value businesses.