i will buy conquer club

[laddida]

i guess you meant graphics on a certain map ithougth you meant the entire site lol.

[72o]

Also add - some of the worst valuation skills ever. It's about Ronc makes the site worth is the value

Umm, what?

[ronsizzle]

Also add - some of the worst valuation skills ever. It's about Ronc makes the site worth is the value

Umm, what?

lol. i have seen some of the best lines in this thread.

the one that said "lackattack would be an idiot to sell it for 200k if it is worth 170k" was fantastic!

[thegreekdog]

thegreekdog is my lawyer, and he is in the process of the paperwork as we speak...

and yes, city mogul would be gone qwert! no more mogul....sorry guys. austerlitz has too many fans right now to kick it out. i would give a better explanation on it though for players. and improve graphics...

I didn't want to say anything until Ron gave me permission to discuss (client confidentiality issues being what they are). However, he has since given me consent.

At this point, we've put out feelers to third party accounting firms with respect to doing a valuation study of http://www.conquerclub.com and associated websites (including the merchandise store). I've also discussed with Ron performing an accounting and tax due diligence with respect to this website. At this point, I'm unaware of whether Lack employs an independent accounting firm or whether Lack pays income tax, US sales tax, or Canadian taxes.

I'm also in consultation with colleagues in Toronto to determine the best way to effectuate the sale. Presumably Lack would want us to travel to Canada to discuss. We can reduce the purchase price of conquerclub to reimburse Ron and me for any associated travel expenses. In any event, I have drawn up draft papers for Ron's review.

Ron and I have also discussed the form of ownership (Ron is intent on single member limited liability company, I'm arguing for S corporation). Ron is concerned about personal liability should any member of CC sue him for assault, battery, and/or intentional infliction of emotional distress. I'm concerned that single member limited liabiltiy company status will result in an increased level of taxation. At any rate, we're discussing this.

[the.killing.44]

He's not selling

[AndyDufresne]

Make sure when you sign the papers, you aren't buying www.theconquerclub.com


--Andy

[laddida]

was all this hard work necessary before even knowing if lack would be remotely interested in selling? seems like painful paperwork and researching for something that maybe a slim shot of actually following through.

[thegreekdog]

was all this hard work necessary before even knowing if lack would be remotely interested in selling? seems like painful paperwork and researching for something that maybe a slim shot of actually following through.

Oh, I don't care. I'm charging Ron $300 per hour. Let's see, it took my 12 minutes to write that post, plus 6 minutes to write this one...

Edit - Seriously though, I'm doing it sort of for free. Ron promised he'd give me some money once he actually owns the site. I like doing this stuff and I want to see Ron owning this site anyway; so free work doesn't bother me too much.

[jammyjames]

I've been involved with a lot of purchases of companies and thing thing nobody has mentioned yet is earnings multiples. Usually purchases are made at prices relative to either EBITA (earnings before interest, taxes, and amortization) or net income times an earning multiple. Multiples are dependent on a number of things and vary depending on the state of the economy. It's essentially the sum of future earnings potential.

Thus if the site is raises 100K per year, we might expect a multiple of 7-8 (conservative and is reasonable in this economy) so a total purchase price of 700-800K. At the height of the boom I saw many manufacturing companies getting multiples of 12-15.

In a past career path I did a fair amount of business valuation, and you are correct that earnings multiples are a widely accepted method of valuing investments. However, the earnings multiple you would use for valuing a metal fabrication company are widely different than that of a website such as this one. I'd be surprised if a widely accepted earnings multiple for a content-based website such as this one would exceed 1. This is mainly due to the fact that internet businesses are typically unstable, as we internet users tend to be a fickle bunch. Especially since the typical demographic on this site is young, and competing sites could steal away your business much more quickly and easily than in other businesses such as manufacturing, which develop customer bases more slowly, and retain those customers much longer. Since we already know that premium income is somewhere in the neighborhood of 125 to 150 dimes, that's probably a fair price for the website. Lack could probably make the case that an additional $25K or so in advertising revenue could be brought in by selling ad space displayed to freemium members.

not to shit on your parade guys but you forgot to factor in one of the most important points when purchasing. Depreciation, obviously depending on which method you would choose to depreciate the site would effect the overall cost ( us Accountants and our money fiddling )
thus changing the offering price down from what estimated by knight.

[Woodruff]

Ron is concerned about personal liability should any member of CC sue him for assault, battery, and/or intentional infliction of emotional distress. I'm concerned that single member limited liabiltiy company status will result in an increased level of taxation. At any rate, we're discussing this.

Speaking of which...umm..."current legal proceedings" should also be considered.

[72o]

I've been involved with a lot of purchases of companies and thing thing nobody has mentioned yet is earnings multiples. Usually purchases are made at prices relative to either EBITA (earnings before interest, taxes, and amortization) or net income times an earning multiple. Multiples are dependent on a number of things and vary depending on the state of the economy. It's essentially the sum of future earnings potential.

Thus if the site is raises 100K per year, we might expect a multiple of 7-8 (conservative and is reasonable in this economy) so a total purchase price of 700-800K. At the height of the boom I saw many manufacturing companies getting multiples of 12-15.

In a past career path I did a fair amount of business valuation, and you are correct that earnings multiples are a widely accepted method of valuing investments. However, the earnings multiple you would use for valuing a metal fabrication company are widely different than that of a website such as this one. I'd be surprised if a widely accepted earnings multiple for a content-based website such as this one would exceed 1. This is mainly due to the fact that internet businesses are typically unstable, as we internet users tend to be a fickle bunch. Especially since the typical demographic on this site is young, and competing sites could steal away your business much more quickly and easily than in other businesses such as manufacturing, which develop customer bases more slowly, and retain those customers much longer. Since we already know that premium income is somewhere in the neighborhood of 125 to 150 dimes, that's probably a fair price for the website. Lack could probably make the case that an additional $25K or so in advertising revenue could be brought in by selling ad space displayed to freemium members.

not to shit on your parade guys but you forgot to factor in one of the most important points when purchasing. Depreciation, obviously depending on which method you would choose to depreciate the site would effect the overall cost ( us Accountants and our money fiddling )
thus changing the offering price down from what estimated by knight.

Depreciation is generally factored in on real assets with a useful life. In this case, the real tangible assets being purchased are only a very small portion of the purchase price, and any depreciation on them would be negligible. I have no idea what the setup is, but I'm envisioning a server rack somewhere and maybe a handful of other pieces of equipment. Maybe $20K total, and that's probably being very generous. Lack probably wishes he had $20K worth of stuff to run conquer club with.

Most of what's being purchased is intangible assets: the domain name, the existing customer base, the rights to use the maps, the free slave labor, etc. There's no depreciation taken on that.

[thegreekdog]

Ron is concerned about personal liability should any member of CC sue him for assault, battery, and/or intentional infliction of emotional distress. I'm concerned that single member limited liabiltiy company status will result in an increased level of taxation. At any rate, we're discussing this.

Speaking of which...umm..."current legal proceedings" should also be considered.

Are there current legal proceedings? See, this is why we need to do a due diligence on CC.

[KoolBak]

This is fun....

And the PRIOR depreciation has zilch to do with this valuation anyhow (at least in the usa).

You haven't outlined how you plan on structuring the purchase, eg, valuation primarily of stock or goodwill or the all important covenant not to compete (buying / selling parties would differ on desires in the states). I have no knowledge of canadian tax laws so I cannot opine. Having 20+ years experience in buying / selling / running small biz's, however, I have a fair idea of what's involved, and at the simplest, it's a pain in de kiester.

An my last damn attorney cost me $400 an hour (ya pillagers)....he's gettin a deal ;o).

I recall pitching a similar offer to purchase over 3 years ago but got no reply but an offer to share a poutine ;o) Dont do it Lack!! lol

And on we go!

Edit: If he's pay $200 grand, surely he'd pay $300 ;o) (cash of course)

[thegreekdog]

This is fun....

And the PRIOR depreciation has zilch to do with this valuation anyhow (at least in the usa).

You haven't outlined how you plan on structuring the purchase, eg, valuation primarily of stock or goodwill or the all important covenant not to compete (buying / selling parties would differ on desires in the states). I have no knowledge of canadian tax laws so I cannot opine. Having 20+ years experience in buying / selling / running small biz's, however, I have a fair idea of what's involved, and at the simplest, it's a pain in de kiester.

An my last damn attorney cost me $400 an hour (ya pillagers)....he's gettin a deal ;o).

I recall pitching a similar offer to purchase over 3 years ago but got no reply but an offer to share a poutine ;o) Dont do it Lack!! lol

And on we go!

Edit: If he's pay $200 grand, surely he'd pay $300 ;o) (cash of course)

I'll ask Ron if he wants to use you to assist with the purchase. The purchase will primarily be goodwill (so we can amortize it).

[Woodruff]

Ron is concerned about personal liability should any member of CC sue him for assault, battery, and/or intentional infliction of emotional distress. I'm concerned that single member limited liabiltiy company status will result in an increased level of taxation. At any rate, we're discussing this.

Speaking of which...umm..."current legal proceedings" should also be considered.

Are there current legal proceedings? See, this is why we need to do a due diligence on CC.

There could be. I couldn't say for sure, of course, because really...who knows?

[KoolBak]

I'll work for beer ;o)

[Qwert]

thegreekdog
Edit - Seriously though, I'm doing it sort of for free. Ron promised he'd give me some money once he actually owns the site. I like doing this stuff and I want to see Ron owning this site anyway; so free work doesn't bother me too much.

If im in your place i will first take money.If you dont have write document with this what ron say,then he can promis you much biger stuff,and you can get zero in hand
I must say that you are first lawyer who work for free,what i meet.
If you continue with this,then your carier will be short.

[Fruitcake]

thegreekdog
Edit - Seriously though, I'm doing it sort of for free. Ron promised he'd give me some money once he actually owns the site. I like doing this stuff and I want to see Ron owning this site anyway; so free work doesn't bother me too much.

If im in your place i will first take money.If you dont have write document with this what ron say,then he can promis you much biger stuff,and you can get zero in hand
I must say that you are first lawyer who work for free,what i meet.
If you continue with this,then your carier will be short.

Boom! qwert the legend has spoken...nuff said.

[thegreekdog]

thegreekdog
Edit - Seriously though, I'm doing it sort of for free. Ron promised he'd give me some money once he actually owns the site. I like doing this stuff and I want to see Ron owning this site anyway; so free work doesn't bother me too much.

If im in your place i will first take money.If you dont have write document with this what ron say,then he can promis you much biger stuff,and you can get zero in hand
I must say that you are first lawyer who work for free,what i meet.
If you continue with this,then your carier will be short.

Boom! qwert the legend has spoken...nuff said.

The guy is correct.

[ronsizzle]

tgd,

lets keep it quiet for a second. finish up the p'work. send it on, and relax...

[vodean]

why do you guys have to come and ruin every thread by talking about RL??

[Knight2254]

I've been involved with a lot of purchases of companies and thing thing nobody has mentioned yet is earnings multiples. Usually purchases are made at prices relative to either EBITA (earnings before interest, taxes, and amortization) or net income times an earning multiple. Multiples are dependent on a number of things and vary depending on the state of the economy. It's essentially the sum of future earnings potential.

Thus if the site is raises 100K per year, we might expect a multiple of 7-8 (conservative and is reasonable in this economy) so a total purchase price of 700-800K. At the height of the boom I saw many manufacturing companies getting multiples of 12-15.

In a past career path I did a fair amount of business valuation, and you are correct that earnings multiples are a widely accepted method of valuing investments. However, the earnings multiple you would use for valuing a metal fabrication company are widely different than that of a website such as this one. I'd be surprised if a widely accepted earnings multiple for a content-based website such as this one would exceed 1. This is mainly due to the fact that internet businesses are typically unstable, as we internet users tend to be a fickle bunch. Especially since the typical demographic on this site is young, and competing sites could steal away your business much more quickly and easily than in other businesses such as manufacturing, which develop customer bases more slowly, and retain those customers much longer. Since we already know that premium income is somewhere in the neighborhood of 125 to 150 dimes, that's probably a fair price for the website. Lack could probably make the case that an additional $25K or so in advertising revenue could be brought in by selling ad space displayed to freemium members.

not to shit on your parade guys but you forgot to factor in one of the most important points when purchasing. Depreciation, obviously depending on which method you would choose to depreciate the site would effect the overall cost ( us Accountants and our money fiddling )
thus changing the offering price down from what estimated by knight.

Depreciation is generally factored in on real assets with a useful life. In this case, the real tangible assets being purchased are only a very small portion of the purchase price, and any depreciation on them would be negligible. I have no idea what the setup is, but I'm envisioning a server rack somewhere and maybe a handful of other pieces of equipment. Maybe $20K total, and that's probably being very generous. Lack probably wishes he had $20K worth of stuff to run conquer club with.

Most of what's being purchased is intangible assets: the domain name, the existing customer base, the rights to use the maps, the free slave labor, etc. There's no depreciation taken on that.

Yup, I left it out intentionally as it is clearly not material. If anything we are depreciating some fixed assets such as a server but that's just about it.

And 72o, I would find it difficult to believe the buyer and seller would agree to 1 years worth of revenue for a multiple of 1. The opportunity cost of selling it would be higher than that. It seems like this site is fairly self sufficient aside from all of the updates and 'features.' Why would lack sell it when it would not take THAT much time to run it for another year. While barriers to entry do play into purchase price, and I think it would not be impossible to build a similar or better website, it probably doesn't make sense unless you can get by cannibalizing each others sales.

[72o]

I've been involved with a lot of purchases of companies and thing thing nobody has mentioned yet is earnings multiples. Usually purchases are made at prices relative to either EBITA (earnings before interest, taxes, and amortization) or net income times an earning multiple. Multiples are dependent on a number of things and vary depending on the state of the economy. It's essentially the sum of future earnings potential.

Thus if the site is raises 100K per year, we might expect a multiple of 7-8 (conservative and is reasonable in this economy) so a total purchase price of 700-800K. At the height of the boom I saw many manufacturing companies getting multiples of 12-15.

In a past career path I did a fair amount of business valuation, and you are correct that earnings multiples are a widely accepted method of valuing investments. However, the earnings multiple you would use for valuing a metal fabrication company are widely different than that of a website such as this one. I'd be surprised if a widely accepted earnings multiple for a content-based website such as this one would exceed 1. This is mainly due to the fact that internet businesses are typically unstable, as we internet users tend to be a fickle bunch. Especially since the typical demographic on this site is young, and competing sites could steal away your business much more quickly and easily than in other businesses such as manufacturing, which develop customer bases more slowly, and retain those customers much longer. Since we already know that premium income is somewhere in the neighborhood of 125 to 150 dimes, that's probably a fair price for the website. Lack could probably make the case that an additional $25K or so in advertising revenue could be brought in by selling ad space displayed to freemium members.

not to shit on your parade guys but you forgot to factor in one of the most important points when purchasing. Depreciation, obviously depending on which method you would choose to depreciate the site would effect the overall cost ( us Accountants and our money fiddling )
thus changing the offering price down from what estimated by knight.

Depreciation is generally factored in on real assets with a useful life. In this case, the real tangible assets being purchased are only a very small portion of the purchase price, and any depreciation on them would be negligible. I have no idea what the setup is, but I'm envisioning a server rack somewhere and maybe a handful of other pieces of equipment. Maybe $20K total, and that's probably being very generous. Lack probably wishes he had $20K worth of stuff to run conquer club with.

Most of what's being purchased is intangible assets: the domain name, the existing customer base, the rights to use the maps, the free slave labor, etc. There's no depreciation taken on that.

Yup, I left it out intentionally as it is clearly not material. If anything we are depreciating some fixed assets such as a server but that's just about it.

And 72o, I would find it difficult to believe the buyer and seller would agree to 1 years worth of revenue for a multiple of 1. The opportunity cost of selling it would be higher than that. It seems like this site is fairly self sufficient aside from all of the updates and 'features.' Why would lack sell it when it would not take THAT much time to run it for another year. While barriers to entry do play into purchase price, and I think it would not be impossible to build a similar or better website, it probably doesn't make sense unless you can get by cannibalizing each others sales.

Many, many businesses have accepted valuation standards of earnings multiples below 1. Restaurants are the best example. Because it is very easy to lose public interest in something like a restaurant, your revenue (and thus earnings) can flatline almost instantaneously. Websites are very much the same. Although this one does seem to have a stable core community, you never know what might happen to change that. Since all you're buying is the intangible assets, the idea of conquer club and it's loyal customer base, any impact to that would be devastating to your investment. Intangible assets have no residual value; that is, if it all goes to shit, they are worthless.

So the purchase price stabilizes at a level where it can be justified in spite of a fairly high level of risk. If I were to perform a professional valuation of the business, I'd be hard pressed to peg it above 1x earnings, unless there is a substantial amount of fixed assets I'm unaware of, which would have a residual value and would prevent it from being a complete loss in the event of a huge revenue decline.

Another interesting component of CC's business niche would be the renewal dates for premium members. Is it level loaded? I doubt it. Did most renewals/joins take place in the last 6 months? Then the purchase price needs to be reduced further, because Lack has already seen the economic benefit, but doesn't have to absorb any more expenses after the sale. If a significant number are set to renew soon, the price can be increased, because the sales that Lack essentially generated have yet to be realized as revenue.

One positive component would be the availability of data. I'm sure it would be easy to find out the percentage of premium members that renew, which could easily be applied to the number of existing premiums to estimate the future sales that are essentially locked in, this is one of the most important intangible assets he's selling.

I love how we're making all these conjectures about the sale of a private company that is not for sale. I bet Lack is getting a kick out of it.

[ronsizzle]

this thread has been funny as hell...

[nippersean]

Also add - some of the worst valuation skills ever. It's about Ronc makes the site worth is the value

Umm, what?

lol. i have seen some of the best lines in this thread.

the one that said "lackattack would be an idiot to sell it for 200k if it is worth 170k" was fantastic!

Lol. Not so clear that sentence - too much Christmas spirit methinks.
What I was trying to say that one way to value something is how much someone is prepared to pay for it.
So if ronc offers $200,000 (and it was genuine) then it's worth at least $200,000