Preparation Tips for Selling a Web Business
There are definately techniques you can use to give yourself the best chance of finding the right buyer for your business. A slice of good luck is always welcome however we all know that the better you prepare the luckier you are likely to get!
I’ve had direct experience of both selling and buying businesses (internet and physical) over a number of years. Although there are certainly some special technical and legal considerations for Web businesses I hoped (for those of you thinking of selling soon) you might find it useful to consider again some best practice basics.
Obviously the overall aim is to build potential site value: traffic + $ value of traffic + segmented list building etc., however here is a simple best practice preparation checklist.
Planning to Successfully Sell a Website Business
– some of the timescales, value additions and key milestones to consider:-
Early in the process:
- Ensure all analytic tracking codes are in place and building a full history of the site(s)
- Continue to try ; measure ; adjust commercial aspects of the site(s)
- Ensure all content being added is legal to use (e.g. copyright free)
- Ensure all necessary use of data and privacy laws are being followed (and consider your operating geographies)
- Where possible, content should be unique (for legal and SEO ranking purposes)
- Organise systems and train staff and suppliers to ensure the site is as easy to operate as possible – Although the buyer (and you) might wish your involvement post sale this is fairly unusual (beyond a simple handover) Ideally there should be no necessity or technical reason for founders to be involved post sale!
- All content management systems and other technologies must be owned and legal, or if not owned then full disclosure of any ongoing financial committment or legal obstacles.
- Regularly research the internet ( sites such as flippa.com ; trade sites; “businesses for sale” sites ) to get a feel for similar site values
- Start to prepare a list of potential acquirers e.g.:- Larger operators of similar sites
- Businesses of scale where your business could offer a complementary fit
- Those actively acquiring in the market
- Identify who has ability to pay cash and/or offer a share deal
- Who in your wider business network could help identify acquirers?
Later in the process:
- Prepare a key facts doc. Explaining the business; selling potential benefits to acquirers; demonstrating value growth etc. ( will probably have more than one version depending on target audience)
- Make a decision to either front/negotiate the sale yourself or engage an agent ( obviously this carries a cost however there can be significant benefits especially if the site owners have no prior experience of selling businesses.) Benefits of engaging an agent can include the ability to remain confidential ( i.e. you probably don’t want it known you are selling your business) , effective use of management time, access to expertise, connections, access to other networks and access to potential acquirer database etc.
- Consider appropriate “business for sale” and internet sale/auction sites however for sizeable sales it is probably more likely that a direct approach to a potential acquirer will be required.
- PR – consider using digital PR ahead of sale to ensure a high internet profile
- Ideally, create choice : i.e. aim to have more than one exit option
What is the value of my web business?
This is of course is the big and exciting question and one which I will attempt to address in another post soon. We all know there will never be a mathematical way of calculating this however I remember some pieces of advice that I believe apply every bit as much to internet based business sales as they do to “bricks and mortar” business.
Sell, Regret, Grow Rich….
Web businesses have typically been carefully nurtured since birth by their loving owners, there has been pain and sacrifice along the road, and now they are about to leave your life…. ok you get the analogy! Just remember in those final deal stages why you started the sales process. Don’t lose your nerve.
Leave Something for the other guy….
It’s a big world out there and yet I like the phrase “what goes round comes around…” . If you care about your business reputation and like to see the businesses you sell succeed, don’t screw your buyer into the deck for every last cent….
Every Seller needs a Buyer
I believe that the secret to maximsing your business value is to follow the kind of steps I outlined above. Make your business EASY TO BUY – that’s the secret. You can achieve this without telling lies or failing to disclose important facts. Serious buyers with the deepest pockets appreciate honesty and professionalism.
Understand your buyer’s motivation
If your potential buyer didn’t see value in your business they would’t be talking to you however if you want to maximise the opportunity….
– Try to see the deal through your buyer’s eyes… put yourself in their position… is there more you could do to make it easy for them to buy?
– Understand your buyer’s business model … where does the value lie for them?
– Buyers often have ego’s and think they can do better in future than you have done in the past… That’s human nature – don’t get upset!
Remember the difference between gambling luck and and business luck …. The harder you work in business and the better prepared you are… the luckier you get!