Web based businesses being bought and sold around the world are faced with uncertain questions surrounding their value. How much value do they hold as part of a business sale?

Many business buyers strongly believe in using an ROI multiplier, as the value of many traditional businesses are determined. However sellers argue value also exists in the domain name, search engine rankings and link popularity. The cost of building the website is also often a consideration in determining the value.

Seasoned business people will tell you a business is only worth as much as someone will pay for it. Web businesses have a history of surprising us with seemingly outrageous sale prices.

How much value would you place on the domain name, rankings and links? Comments, please.

High search engine rankings in competitive spaces are undoubtedly very attractive for potential buyers. Why is it then buyers are so reluctant to place monetary value on the rankings as part of a business sale? Determining how much the rankings are worth is tricky, dubious and inexact.

Rankings are fickle because of the reliance upon the search engine. This third party is one you have no control over, and they can change their ranking algorithm at any time, without warning. There is significant risk in paying large sums of money for a marketing resource completely outside your control.

Undoubtedly, there in value in the rankings though. For many web businesses the search engine rankings draw a significant percentage of their customers. Consider also that the business may have paid a search engine optimisation company to achieve their rankings.

One formula I have seen used in valuations examines the keywords the website ranks for, and cost of acquiring the same customers through pay-per-click advertising. This formula also has the added bonus of giving you a realistic idea of what it will cost you to advertise on the search engines should something happen to your rankings in the future. Is the web business still viable if the traffic is fully paid for?

Do you have other ideas about the value of search engine rankings? Please sure your thoughts by commenting.