best way to sell a business?

[julian]

Say you had a web busineess that over 3 years did 500k t/o consistently and made 100k profit.

You put it up for sale, get lots of interest from different types of people.

A. They want the website but don't want to pay for the business assets, ltd company etc

B. They just want the domain (hence want knock down price)


wheres the 'real' value here..?

And are we generally talking 2.5 x net profit



thanks..

 

[willbon]

Whether it's the online marketing, repeat custom or current database, surely the 'business' is the value of the domain less the cost of designing and building the website that sits on it.... therefore the main value is the name... unless you spent a fortune on the website?....

Could the website be made into a template site and resold in volume? (after you've got shot of the domain?) .. maybe another route?


2.5x net profit... lots of different views on this and depends on economic / social trends... bit it's a good starting point...

 

[tifosi]

Depends on how much of the business is recurring revenue e.g. maintenance/hosting etc, how much is repeat business, and how much is new business. It'll determine the goodwill value and future direction.

 

[bb99]

If the figures being banded about are broadly in line with what the owner thinks is reasonable, I'd say your first port of call would be an accountant who could advise as to the tax implications of each different type of sale. These would be tailored to the business owner's circumstances (both now and in the future).

Any savvy buyer will also be trying to do the same, if you're lucky then the right answer might be the same one for both parties.

 

[Edwin]

Can't help on the multiples, but if you sell the whole business as a going concern you might be able to claim "Entrepreneur's Relief" - something to discuss with your accountant, but it could mean you end up paying a lot less tax on the sale. For the amounts you're talking about, I'm assuming you'll need good financial and legal representation in any case.

 

[bermuda]

I just had a question in my mind and that is if your web business is that profitable, why are you going to sell it then? Everybody is interested in having an online business that can guarantee them a decent monthly income and if you run the site, in the long term you will earn more than the initial amount offered by a buyer. Anyway, what you say is true to some extent because many buyers simply look for cheap bargains.

Even if you provide them with authentic proof about your business and how profitable it is, again they want to pay a minimum and then grab the site. My suggestion would be not to use any of the the online domain auctions, simply put up an image at a top corner of your website with a short text message that you intend to sell your business and then the real customers who would appreciate the occasion will be in touch.

 

[namealot]

Pure web based business are so easy to scam make up bs figures, turnover etc
They look why it turns over what it does, how much it depends on it staying the same to do so? what difference if it were not to e.g. top search engine page 1 100k turnover bottom second page 10k what you sell service product etc. The endless variables and often no real would tangible assets? Makes buying or selling a pure web based business a mine field and normally the traditional none net based business and investors are often reluctant to value your business or if they do its peanuts ?

Sometimes your exit strategy can fair better selling to larger company, competition etc for cash and share options etc... They seam to entertain multiples (helps that there also limiting themselves your taking the risk in taking the there shares etc ) Otherwise be prepaid to have every inch of the business picked over and kicked around to find a buyer prepared to pay realistic multiples and doubt three years would be enough either 7 and 10?