buying and selling websites

Tips To Make Buying & Selling A Website Simple, Fast & Easy

Founder & CEO, QuietLight

Mark Daoust

[email protected]

www.quietlightbrokerage.com(800)746-5034 FREE

2www.quietlightbrokerage.com

Founded in 2007

600+websites & online

businesses sold

vv$70M+

in total transactions

$20M on track

sales in 2015

We’ve learned a lot about what

makes a successful sale and acquisition

http://www.mobilelads.com/

Buyers & Sellers Follow a Predictable Process

Explore the Marketplace

Negotiate an Offer

…there’s more, but we won’t explore due

diligence or closing

Preparation to Buy or Sell

I want to step through this common process and pull 1 or 2 lessons for both buyers and sellers for each step that we’ve observed over the course of 600 deals and $70mm+ in acquisitions.

Buyers should start small, then develop an acquisition strategy, and sellers should focus on preparing the right documentation.

PREPARING TO BUY OR SELL

Should I Buy Big or Buy Small?Tips 02


Should I Buy Big or Buy Small?

Go into your first purchase knowing you could lose your

entire investment

Online businesses lose value faster than offline businesses

Starting big can be overwhelming & leave you

miserable

Identify natural points of leverage

Know what you are good at

Pool Resources

As you gain experience, buy bigger with an acquisition strategy

First time buyers should buy small


Sellers: How Should You Prepare?Tips 03


Sellers: How Should You Prepare for a Sale?

01

VALUATION

Get a starting valuation. You’ll discover if you should wait or if you

are ready to go to market today

02

TIMING

Timing your sale has significant impact on

value

03

FINANCIAL FOCUS

Your financials should always be the first place

you focus. Get these right.

04

DOCUMENTATION

Prepare documentation



Sellers: Financials are your First Focus, Make Sure they are RightReturn on InvestmentBuyers have one reason to buy your business: for a return on investment. Learn to speak their language.

Due DiligenceDeals fall apart most frequently during due diligence. Get your financials right to make this a breeze.

Accounting Methodology Make sure your accounting methodology is right for the best valuation.• Accrual/cash basis accounting can turn out different valuations• Recording certain expenses wrong can lower your valuation

(example: website rebuild)

Verification DocumentsCollect and organize verification documents• Bank statements• Merchant statements• Tax returns



Sellers: Don’t Ignore other Documents

CONTRACTS

VARIOUS REPORTS

GOOGLE ANALYTICS

01

02

03

Financials are the most important documents to have right, but don’t ignore other documents

Contracts with vendors

Various reports on membership/clients (collect as much as possible)

Google Analytics setup & installed correctly


Sellers should ‘own the ugly’ and buyers should act like high value buyers.

EXPLORING THE MARKETPLACE

Sellers: Own the "Ugly" Parts of Your BusinessTips 06


Sellers: Own the "Ugly" Parts of Your Business

There is no such thing as the perfect website for sale. Don't hide the

ugly parts of your business - own them.

Don't Hide The Ugly Parts

Buyers can handle weaknesses. Buyers can handle threats. Buyers can't handle

surprises.

Buyers Can't Handle Surprises

Buyer's will assume the worst if they are

surprised by a weakness

Buyer's Will Assume the Worst

Buyers will also question your honesty

and competency if they discover a

significant omission.

Buyers will Question your Honesty

Be upfront about weaknesses. Explain

them. Explore them.

Be Upfront about Weaknesses

Help a buyer to form the proper conclusion about your business's

weakness.

Help Buyer to Form Proper Conclusion

?


Buyers: How to Deal with a Bad SurpriseTips 07


Buyers: How to Deal with a Bad Surprise

Learn to act like a high value buyer

Possible Conclusion

Ask Seller

Make Observation

Reach Conclusion



Why do sellers hide things?

0203

01Sellers focus on metrics that aren't the same as you need to make a buying decision.

Sellers generally don't know what you need to make a good decision.

Sellers love to focus on their accomplishments, not their failures

Buyers: How to Deal with a Bad SurpriseBeing surprised by "ugliness" isn't uncommon. How you react to it sets you apart as a buyer.


Buyers: Keep your offers simple. Sellers, don’t rely on a bidding war to get the best price possible.

NEGOTIATING AN OFFER

Buyers: Keep Your Offers Simple Tips 08


Buyers: Keep Your Offers Simple

There is value to building in complexity (holdbacks, financing,

performance bonuses) into an offer to protect against risk

Value to Building in Complexity

Overly complex offers rarely succeed because sellers have

difficulty identifying their real value

Complex Offers Rarely Succeed

Which of these is easier to understand? Which seems less risky? Simple offers are more

easily accepted

Simple Offers More Easily Accepted




VSOffer 01

• Total Offer: $450,000

• $400,000 Cash

• $50,000 30-Day Holdback

Offer 02

• Total Offer $480,000• $300,000 Cash at Close• $120,000 Payable Over 3 Years w/ $25 balloon

payment at end• Performance bonus of $5,000 for each quarter over

3 years that matches or exceeds sellers last respective quarter's net income.

• Net income shall include revenue - expenses with expenses not exceeding seller's last respective quarterly expenses.

Consider these Two Offers

Which of these is easier to understand? Which seems less risky? Simple offers are more easily accepted


Sellers: Bidding Wars are Not Always GoodTips 09


Sellers: Bidding Wars are Not Always Good

Inform all parties that there are multiple interested buyers

Give buyers an option to back out if you anticipate competing bids

Give remaining buyers a deadline to submit an offer

If two or more offers are received when you weren’t expecting, allow all buyers to submit one revised offer. Ask them to make it their best and final.

The GoodBidding wars can use competition to leverage purchase price

The Bad• It can cause a lot of bad will (remember

that deals are made on trust)• Buyers who lose may feel increased

leverage if the business comes back to market

• Buyers who overpay due to bidding wars are more likely to back out of a transaction.

• A bidding war might be a sign that you priced improperly

Managing a Bidding War


Want to learn more, download our whitepaper on the

5 Mistakes Sellers Make that Destroy Website Value

http://www.quietlightbrokerage.com/5-mistakes

THANK [email protected]

www.quietlightbrokerage.com(800)746-5034 FREE


A Quick Look into the Presentation

Start

End

About Us Tips -01 Tips -03

Tips -08 Tips -07 Tips -05

Tips -04

Tips -09

Tips -02

Tips -06

About Quiet Light Brokerage

Buyers: How to Deal with a Bad Surprise

Buyers & Sellers Follow a Predictable Process

Should I Buy Big or Buy Small?

Sellers: Should you Wait or Ready to

Go?

Sellers: Financials are your First Focus

Sellers: Don’t Ignore other Documents

Sellers: Own the "Ugly" Parts of Your

Business


Sellers: Bidding Wars are Not Always Good


About Quiet Light BrokerageWe Sell High Value Websites

Buyers & Sellers Follow a Predictable ProcessTips 01

Sellers: Financials are your First FocusTips 04

Sellers: Don’t Ignore other DocumentsTips 05



VSBest case

Est. $150,000 tax liability leaving $600k (absent broker fees)

Worst case

Est. $263,369 tax liability leaving $486,630 + higher taxes on regular income

Example on Allocation

Depending on how the purchase price is allocated, a seller will pay drastically different taxes. Here is a “best case” and “worst case” scenario for a $750,000 deal

The tax consequences for the seller can be a deal breaker.

Larger offers ($500k+), negotiate the asset allocation up front. Why?
