Comments on: Mezzanine Financing an Internet Acquisition http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/ Tired of useless Top 10 Lists for ranking in Google? Looking for effective and insightful info? SEO Black Hat Blog offers articles on Blackhat SEO, Linkbait & Link Spamming. And if you need to escape White Hat SEO Whiners, check out he Private Black Hat Search Engine Optimization Forum. Sat, 13 Mar 2010 09:30:04 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: Risk VS. ROI - Real Case Study On The Works | Make money online! http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7282 Risk VS. ROI - Real Case Study On The Works | Make money online! Fri, 14 Sep 2007 14:48:21 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7282 [...] I must confess, when I read Quadszilla’s post about financing an World Wide Web acquisition, I felt the same way most of the folks who commented on the thread did. [...] [...] I must confess, when I read Quadszilla’s post about financing an World Wide Web acquisition, I felt the same way most of the folks who commented on the thread did. [...]

]]> By: Risk VS. ROI - Real Case Study On The Works — Black Hat SEO Diary http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7269 Risk VS. ROI - Real Case Study On The Works — Black Hat SEO Diary Sat, 08 Sep 2007 14:48:11 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7269 [...] September 8th, 2007 | Finance submit_url = "http://blackhatseodiary.org/finance/risk-vs-roi-real-case-study-on-the-works"; plugim_url = "http://blackhatseodiary.org/finance/risk-vs-roi-real-case-study-on-the-works"; plugim_title = "Risk+VS.+ROI+-+Real+Case+Study+On+The+Works"; I must admit, when I read Quadszilla’s post about financing an internet acquisition, I felt the same way most of the people who commented on the thread did. [...] [...] September 8th, 2007 | Finance submit_url = “http://blackhatseodiary.org/finance/risk-vs-roi-real-case-study-on-the-works”; plugim_url = “http://blackhatseodiary.org/finance/risk-vs-roi-real-case-study-on-the-works”; plugim_title = “Risk+VS.+ROI+-+Real+Case+Study+On+The+Works”; I must admit, when I read Quadszilla’s post about financing an internet acquisition, I felt the same way most of the people who commented on the thread did. [...]

]]> By: QuadsZilla http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7267 QuadsZilla Sat, 08 Sep 2007 10:02:30 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7267 "you have paid 2 times annual profits which seems to indicate a extremely high risk investment not consistent with the rate of return offered to lenders." Ahh, but those profits do not come with the management that got the site to where it is now. If you assume that top management is worth 200k per year, then suddenly everything makes sense. “you have paid 2 times annual profits which seems to indicate a extremely high risk investment not consistent with the rate of return offered to lenders.”

Ahh, but those profits do not come with the management that got the site to where it is now. If you assume that top management is worth 200k per year, then suddenly everything makes sense.

]]> By: QuadsZilla http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7266 QuadsZilla Sat, 08 Sep 2007 09:30:50 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7266 1. If you can find me people that pay 10X annual, I'll sell most of what I have right now, including this site. I'm not talking about these "2.0" sites with no revenue here. (the only exception would be domains that, by themselves, should fetch a premium). 2. If you can get me 100% on my money lead by someone with my ability, let me know. 3. Think about it, if the LBO (leverage buyout) rate should be 100%, then how can a 10 P/E be justified? 1. If you can find me people that pay 10X annual, I’ll sell most of what I have right now, including this site. I’m not talking about these “2.0″ sites with no revenue here. (the only exception would be domains that, by themselves, should fetch a premium).

2. If you can get me 100% on my money lead by someone with my ability, let me know.

3. Think about it, if the LBO (leverage buyout) rate should be 100%, then how can a 10 P/E be justified?

]]> By: mikepeters http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7262 mikepeters Sat, 08 Sep 2007 08:29:25 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7262 IMO either: 1) a ridicuously low price for the website was paid. 2) a ridicuously low return for the lenders is being paid. The risk you have assumed in buying the website does not match the implied risk given the rate of return to the lenders. Assuming annual profit of the website of $200,000 (a guess but how else are you going to make the repayments) you have paid 2 times annual profits which seems to indicate a extremely high risk investment not consistent with the rate of return offered to lenders. In conclusion, either: 1) A "Fair" price is $2,000,000 for the web site 2) Lenders should be getting a 50-100% return. IMO either:
1) a ridicuously low price for the website was paid.
2) a ridicuously low return for the lenders is being paid.

The risk you have assumed in buying the website does not match the implied risk given the rate of return to the lenders. Assuming annual profit of the website of $200,000 (a guess but how else are you going to make the repayments) you have paid 2 times annual profits which seems to indicate a extremely high risk investment not consistent with the rate of return offered to lenders.

In conclusion, either:
1) A “Fair” price is $2,000,000 for the web site
2) Lenders should be getting a 50-100% return.

]]> By: QuadsZilla http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7260 QuadsZilla Fri, 07 Sep 2007 22:20:31 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7260 the domain has existing revenue that covers the note payment. The site in question jells with other white hat properties I own, so the synergy should help everything to grow. Plus, they're dealing with me and my track record of successes. So the rate of return makes sense given the actual risks involved. Anyone paying 50-100% is crazy or desperate. I'm neither. You know the old saying, "only lend money to people that don't need loans". <blockquote>And if, hypothetically, the whole thing goes belly up (make up your own crazy scenario) - are you still on the hook for payments?</blockquote> Of course not. If that were the case I would expect to pay only 8% given my financials. the domain has existing revenue that covers the note payment. The site in question jells with other white hat properties I own, so the synergy should help everything to grow.

Plus, they’re dealing with me and my track record of successes. So the rate of return makes sense given the actual risks involved.

Anyone paying 50-100% is crazy or desperate. I’m neither. You know the old saying, “only lend money to people that don’t need loans”.

And if, hypothetically, the whole thing goes belly up (make up your own crazy scenario) – are you still on the hook for payments?

Of course not. If that were the case I would expect to pay only 8% given my financials.

]]> By: meegwell2 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7259 meegwell2 Fri, 07 Sep 2007 22:07:24 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7259 Considering the risk levels in web ventures, IMO you got a fantastic deal. I've studied an enormous amount of these type of structured financing ventures (VC, Angels, etc) in grad biz school and been involved w/ a few in the real world. Assuming as you stated, the site (domain, traffic) is the only security for the loan, that is quite a risky investment for someone. As far as risk/return goes, you should see rates much higher than the 15-18 you are paying. If it were a VC, and lets say for the sake of argument you had an equity buyback call option for a certain term (since you dont want to giv eup equity), the investors would still be looking for upwards of 50-100 return given the risk factor. There is one theory that when it comes to seo/web marketing we are all noobs to some degree since the technology and rules are changing daily. It is that change that creates such a high risk, and that high risk that demands such high returns for investors...whether it be debt or equity investment, for small entrepreneurial type operations. So the debt investor will get some sort of fixed payment secured by nothing more than the perceived value of the site (which Im sure is quite good). And if, hypothetically, the whole thing goes belly up (make up your own crazy scenario) - are you still on the hook for payments? Sounds like you made a great deal. Best of luck to you! meegwell Considering the risk levels in web ventures, IMO you got a fantastic deal. I’ve studied an enormous amount of these type of structured financing ventures (VC, Angels, etc) in grad biz school and been involved w/ a few in the real world.

Assuming as you stated, the site (domain, traffic) is the only security for the loan, that is quite a risky investment for someone. As far as risk/return goes, you should see rates much higher than the 15-18 you are paying.

If it were a VC, and lets say for the sake of argument you had an equity buyback call option for a certain term (since you dont want to giv eup equity), the investors would still be looking for upwards of 50-100 return given the risk factor.

There is one theory that when it comes to seo/web marketing we are all noobs to some degree since the technology and rules are changing daily. It is that change that creates such a high risk, and that high risk that demands such high returns for investors…whether it be debt or equity investment, for small entrepreneurial type operations.

So the debt investor will get some sort of fixed payment secured by nothing more than the perceived value of the site (which Im sure is quite good). And if, hypothetically, the whole thing goes belly up (make up your own crazy scenario) – are you still on the hook for payments?

Sounds like you made a great deal. Best of luck to you!

meegwell

]]> By: itrends http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/comment-page-1/#comment-7254 itrends Thu, 06 Sep 2007 14:32:30 +0000 http://seoblackhat.com/2007/09/05/mezzanine-financing-an-internet-acquisition/#comment-7254 What a wonderful example of the perfect sale and buy. You worded it fantastically, made it clear, and gave me a lot to think about when it comes to site aquisition in the future. Will you be getting your new "mini me" black hatter onto this new project? Indeed... will we ever know what it is? ;) Cheers, David http://www.freebet1.com What a wonderful example of the perfect sale and buy. You worded it fantastically, made it clear, and gave me a lot to think about when it comes to site aquisition in the future. Will you be getting your new “mini me” black hatter onto this new project? Indeed… will we ever know what it is? ;)

Cheers,
David
http://www.freebet1.com

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