Buying an Internet Business
So you want to buy a website. It is an appealing proposition. An existing site has proven revenue and eliminates some of the start-up risks. But going it alone is like swimming with sharks. Exiting but dangerous.
Would you buy a house without an agent? It does not matter if you are dealing with the site owner, a broker or an M&A firm – they are working for the seller. If you have not purchased a business before you are at an extreme disadvantage. There is no obligation on these agents to let you know about factors that will make your purchase overpriced. The site owner or broker performs no due diligence for you.
What are the Evaluation Criteria and Risks
There are many factors to evaluate the value of a website for sale. Key ones include:
- Technology Value – If you are purchasing a company with proprietary technology there are many factors. Is the software truly proprietary? Is it GPL and available to be forked by competition? Do you need a code review?
- Sales trends – The world of Internet sales is very fluid. Sales trends are critical. It is very difficult to reverse down-trending sales trends.
- Revenue Sources – Is the business based on repeat business or new sales. What is the customer lifetime value?
- Traffic Sources – Are PBN’s being used? Are the PBN’s being transferred to you? Are there other grey and black hat traffic sources being used?
- Transaction Structure – Is this a company sale or asset sale?
- Commitment Required – Everyone will say that your purchase requires little day-to-day work on your part. Passive income. This is generally a fallacy ( a lie!). Just like off-line businesses, you must be involved in the day to day operations to make your purchase successful or continue and grow the revenue.
- Advertising – Is traffic being acquired with paid ads? What is the cost?
- SEO – Are there any technical SEO issues. Can value be added by improving the sites SEO structure
What do we do
Our service can help you find a profitable website or vet one you are interested in. We will evaluate the revenue sources, sales trends, technology offering, and infrastructure. We will look at the traffic sources. Evaluate the SEO status and organic traffic. We also are aware of many sources of websites for sale and can refer you to sites available that meet your requirements.
This is a major purchase in a cut-throat world. Unless you are very experienced in purchasing a business, there are many pitfalls. There are three components to our value.
- Due Diligence – You MUST have some outside person experienced in M&A of online businesses do your due diligence. It is irresponsible to make a major purchase without representation. The seller has their agent you must have yours. Whether you use us or another party, don’t do this alone.
- Negotiating – We know the value of online companies. Our fee will typically be absorbed by the savings in negotiating the purchase price.
- Risk Management – This is a major value. The elimination of risk. We can save you from major pitfalls and total losses. We have done this before and know where the landmines are.
I have purchased and sold over $1,000,000 worth of technology companies for my own portfolio. Many have been very successful acquisitions some have been utter failures. By using our service you can benefit from my successes and learn from my mistakes.
What Does it Cost
Our cost structure is very straight-forward. We charge an initial engagement fee of $150. This allows us to establish a partnership model for the evaluation, due diligence, and transaction. The final fee is based on the purchase price of your acquisition:
up to $10,000 8% of the purchase price
$10,000 to $50,1000 7% of the purchase price
$50,000 + 6% of the purchase price
Looking to purchase a website and need due diligence?
Drop us a note and we will be happy to help you.