@Dominique 214736 wrote:
2 to 3 years of revenues is fairly normal for a business buy-out.
I don’t think 2-3 years revenue is normal for an online affiliate business/site. I’ve never seen any of the debates on site value suggest a 24-36 month multiplier … perhaps only 8-12 months.
Dom, you can buy ANY of my sites at 3 years annual revenue ANYTIME you want …
:hattip:
The payment should be based on the retained value of “old players” … and it would be possible to do some modelling I guess on the loyalty profile on each set of players for each affiliate and project from that – by measuring the recurring value of “old” players over the six months prior to pullout …
But let’s be serious there is no way any of that will happen – this will be a quick and dirty Grand Prive and eCOGRA exercise … with a generic formula applied …
So let’s anticiapate and let’s do some modelling ourselves and see where we go …
The first thing to acknowledge is that there will be no income for new players. Affiliates didn’t market after the program closed so you cannot claim for potential new players, and it’s new players that generate a lot of the monthly incomes.
If I did some really ugly generalisations, I’d suggest that most players (90%) are lost to the casino over a couple of years (that is have a loyalty base of 1-24 months), and that the reality is that around half of depositing players are lost within 6 months, then half the remainder are lost within 6 more months, half again at 18 months etc.
Meaning a monthly revenue profile of :
Month 1 = 100%
Month 2 = 90%
Month 3 = 80%
Month 4 = 70%
Month 5 = 60%
Month 6 = 50% (1/2 lost)
Month 7 = 45%
Month 8= 40%
Month 9 = 36%
Month 10 = 32%
Month 11 = 28%
Month 12 = 25% (and 1/2 the rest lost)
…
Month 18 = 15% (and 1/2 again)
Month 24 = 10% (90% of players lost)
Interestingly if I sum up the values from that profile then the first 12 months add up to 656% of month one (or 6.5 months total revenue) and the second 12 months are an additional 178%.
So, overall a projected two year value of an affiliate account using the (admittedly ugly simplistic) modelling that I suggested gives a total value of 834% of initial month value (or 8.34 months) which sits nicely in the 8-12x earnings that I mentioned that I see bandied about for site sales in forum threads.
So within the confines of this private forum I’d say that if Grand Prive offered anything above 8.34 x final month revenue then it would actually be a fair offer.
I beleive that you can argue with my modelling numbers, (and of course each site would be different and might have whales which could skew data) but I beleive that the general principal of account modelling with significant customer attrition does reflect the REAL value of players …
Food for thought?
:tongue: