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"I think this provides an interesting insight into what God deems to be an acceptable return on one's capital..." - More Below
Last Email at 12:50PM.
While lying in bed, not thinking about anything, I suddenly felt the Spirit of God move upon me because God wanted me to ask Him a question. That question was, 'ask me how much your website (GoForex.net) was worth to Internet Brands'. However, it wasn't so much in words as it was an immediate knowing of what God wanted me to do. So I did. It was a sudden, unambiguous, urgent and immediate knowledge of what God wanted me to do.
I can't think of another time in my life where God has moved me to ask Him a question, normally it is the other way around! So I had to quickly come up with a starting price from which to start at, and then I went into prayer.
I started at US$550k, and went up in $100k increments until he stopped me at US$1250k, or US$1.25 million. $550k was $50,000 above Internet Brands' top offer to me, which lets you know just how low I thought their offer was to me!
I was a bit perplexed as to why God stopped me at $1250k as that number didn't mean anything to me other than it was close to what I had originally asked for my website.
That was until a few months later when I went back and looked at the valuation document that I'd sent Internet Brands. $1250k represented half of what I had calculated my site would add to Internet Brands' market value at the time. i.e. US$2.5 million.
Price/Earnings Ratio: The Price/Earnings ratio or P/E is calculated by taking the market value of a company and dividing it by its net profit or after-tax earnings. It is a measure of how much investors are willing to pay for every $1 of earnings (profit) that a company makes. e.g. $346 million ÷ $10,863,422 = 31.85 (P/E ratio)
Calculation: I took the after-tax profit of US$80,000 (including expenses and a suggested 10% management fee) and multiplied it by Internet Brands' P/E ratio that they were trading at on the NASDAQ stock exchange at the time of 31.85, to get a value of US$2,548,000 or approximately US$2.5 million. Half of that value is $1,250,000 or $1250k - the same number that God told me my site was worth to Internet Brands!
(US$80,000 × 31.85 (P/E ratio) = US$2,548,000 or approximately US$2.5 million.
US$2.5 million ÷ 2 = $1,250,000 or US$1250k.)
I think this provides an interesting insight into what God deems to be an acceptable return on one's capital. i.e. 100% or doubling your money! In fact, even after I lowered my minimum asking price to US$750,000, allowing Internet Brands to more than triple their money, they still didn't accept it!
No, Internet Brands was looking to make a 400-500% return on their capital! That is not smart business, particularly when I was told that GoForex.net would be a "keynote addition" to their portfolio of websites.
So, given the choice of either doubling or tripling their money or taking nothing, Internet Brands chose nothing. Why? They're bottom feeders and gutter dwellers, preying on unsuspecting prey who they can exploit for their own empowerment at the expense of site owners, despite them specifically telling me that they are "fair".
So why did I start at $550k in my questioning? I don't know the answer to that other than God put that figure in my mind to start from so I would arrive at the right price. Although if you look closer, the difference between $550k and $1250k is $700k. Another of God's numbers: 7 increments of $100k.
Update: January 8, 2015:
So I guess the second question is, why did God want me to know what my site was worth to Internet Brands over a year after I rejected their offer of US$400-$500k for my website? That is a good question and not something I definitively know the answer to, although I can posit several theories as to the reason why.
Perhaps He wanted me to know that I was right to reject their unreasonable offer to me, even though I knew in my heart that they were the right people to sell my site to when they came along - or at least they should have been! Instead they turned out to be the worst people I have ever dealt with in my life!
They were my 'exit ramp' out of the business that I no longer wanted, and they did! Something seemed to change 3/4 of the way through the acquisition process and I felt a shift in attitude towards me that I cannot explain.
Internet Brands' offer represented 32% of God's valuation, and they were trading at around 32 times net profit at the time. I was also 32 years old at that time.
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