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Selling £six figure website
nomis5




msg:4089890
 11:34 am on Mar 2, 2010 (gmt 0)

I'm in the final stages of agreeing to sell one of my websites for a six figure £ amount. I need any advice you can give me about the sales procedure. I don't need advice as to if I should sell it - the price is right and I want to sell.

I'm in the UK, the buyer is an Israeli and his company already owns several popular sites.

We are going to use a well-established escrow company to transfer money and ownership. But aside from that I have no idea what pitfalls await me in the final stages. Could anyone use a purchase like this to damage me? I have two other popular websites and several smaller ones.

I haven't seen any contract yet, I am meeting the guy on Thursday in London. He most certainly has experience of buying / selling websites in the past. I have no experience.

Any ideas or warnings will be most gratefully received.

Worried from Warwick.

 

astupidname




msg:4096599
 8:19 pm on Mar 12, 2010 (gmt 0)

What an excellent topic, great thread! I hope some day to be in a similar predicament, I think... Although I personally would probably want to keep leaning on the cash cow if the cow (site) is making any significant money. As you say, there is a line that is personal to each person, and the circumstances of any deal.

I'm meeting the buyer next week in his relative's home in London.

I would think that the personal aspect of that, willingness to meet in the buyer's relative's residence, says a tremendous amount about the integrity of the deal. Although, may want to verify how long the relative has lived there....

We live in the real world where this sort of thing is done every day

If that's the case (full of cash?!) I'm going to start hanging out at the airport more, looking for errantly misplaced briefcases or duffel bags with green paper hanging out of them.....

Good luck to you, hope it turns out as you wish!

artefaqs




msg:4096628
 8:45 pm on Mar 12, 2010 (gmt 0)

If that's the case (full of cash?!) I'm going to start hanging out at the airport more, looking for errantly misplaced briefcases or duffel bags with green paper hanging out of them.

Contrary to what the American Express commercials want you to believe, chances are that shiny new stove at that hip new bistro down the street was very likely paid for in cash. When you get to a certain level in certain businesses, there are substantial incentives for using cash.
forget about the suitcases and cash idea, there are important limitations to the cash you are allowed to travel with international. Ask the Swiss !

That may be your gut feeling, but it's far from the truth. Many people travel internationally every day with cases full of cash. It's so common that there are forms and procedures for handling just this sort of thing.

As a US citizen, I can't speak to the OP's situation since he's in the UK. But here's a link to the U.S. Customs and Border Protection flyer about transporting large sums of money overseas [cbp.gov]. Its very first line states:
It is legal to transport any amount of currency or other monetary instruments into or out of the United States.

All you have to do is complete this form [fincen.gov] and go about your business.

If, as you stipulate, there is some restriction on moving money from country to country in the E.U., well that's a discussion that's beyond the scope of this thread.

I still say deal in cash in a public place. Lowest possible risk for all parties involved.

Even if you don't go the cash route, I don't like the idea of meeting the buyer at some relative's house. It's too easy for it to be a set-up. Meet someplace public and neutral.

Maybe show the buyer the web site on a laptop in a coffee shop, then accompany him to his bank and stand with him while he withdraws the cash or has a certified check made out to you, then give him the disc or computer or flash drive or whatever.

MrHard




msg:4096845
 7:27 am on Mar 13, 2010 (gmt 0)

I would think that the personal aspect of that, willingness to meet in the buyer's relative's residence, says a tremendous amount about the integrity of the deal


I feel just the opposite. In a case like this I would opt for not doing a face to face meeting unless they insist, or perhaps offer one after the deal is sealed to inform them of details, or send a rep to the meeting.

A cash transaction of that size. That's got to raise red flags. Just have the funds transferred and make a nice clean exchange. Legit places in this century transfer funds so there is some type of record of the transaction.

The reason you are nervous about the meeting is that you feel you could do or say something that breaks the deal. You may be correct. It's like someone selling their own home, it's very difficult to stay unbiased and not get into discussions that can break the deal especially in a familial environment where you may be asked personal questions by the buyer or their relatives.

I would have someone accompany me into the meeting, and a second person wait outside in the car. Man on deck?

ziajunu




msg:4096940
 2:23 pm on Mar 13, 2010 (gmt 0)

Escrow handles domain name transfer only, they donot take care website, scripts etc..

lammert




msg:4097201
 1:45 am on Mar 14, 2010 (gmt 0)

I would never accept a meeting in a relative's home. Even if the other party is honest, it still gives you a psychological disadvantage because you are in a place you don't know and they aren't.

A public neutral place would be best.

castar




msg:4097727
 3:47 am on Mar 15, 2010 (gmt 0)

Great thread.

Anyone thinking that market prices are too low should be out there taking out mortgages at 7% and buying sites to get 30% returns. There are a lot of sites selling every single day. And I'm not talking just the junk at Flippa.

So if not Flippa, how do you get the word out that you have a site that you want to sell for mid six figures. I've been trying to sell my site on a site similar to Flippa. Not worth it in my opinion. For those who have been successful in selling sites 6 figures or more, how did you find your buyer?

buckworks




msg:4097730
 3:56 am on Mar 15, 2010 (gmt 0)

The buyer found me.

artefaqs




msg:4097735
 4:09 am on Mar 15, 2010 (gmt 0)

For me, I advertised sites I had for sale on Flippa, and people who inquired about those sites ended up buying other sites I owned.

I agree, Flippa is far more trouble than it's worth. 99% of the so-called "buyers" I've dealt with on there are just bottom feeders looking for something for nothing, who are just kicking the tires and not serious about doing business.

JS_Harris




msg:4097759
 5:22 am on Mar 15, 2010 (gmt 0)

If your site has up to date contact information a serious buyer will eventually find you. I've seen a lot of consolidation in one of my niches this year already.

oddsod




msg:4097950
 1:23 pm on Mar 15, 2010 (gmt 0)

castar, there isn't one single place that exclusively stocks sites that are upmarket from Flippa. There's no Flippa Plus.

There's the JS_Harris passive approach of sitting and waiting, but that may not suit everyone and the buyer with the biggest budget may never be actively hunting for a site to buy.

Places like businessesforsale, sunbeltnetwork, bizquest etc., are the places to list higher value sites. There's also the option of hiring a broker to assist. Pick the right one and they can be invaluable in identifying prospective buyers in your industry and elsewhere and making initial contact to suss interest. Some brokers have listings on their own sites. I don't make broker recommendations, but there are at least two brokers who regularly sell websites at higher multiples than you see in the Flippa/DP kind of marketplaces. You should be able to find them with a little bit of research. The higher multiples they get is because they focus on better quality properties (less risk) and put in a lot of work. Because they advertise in business mags, finance newspapers etc., they often have a database of interested buyers whom they've already vetted and got signed NDAs from.

The way it works for the higher value websites is a bit less crass than a public auction where every idiot who doesn't have $2 to his name can post a criticism of your site, its prospects or your asking price. The work happens behind the scences - by PM, email, phone chats, physical visits. Involved are often Letters of Intent, long and boring discussions on terms, NDAs, sales contracts etc. and, contrary to how some here would like to do business, the transactions tend not to happen in cash.

castar




msg:4098105
 5:16 pm on Mar 15, 2010 (gmt 0)

Thank you for the info, it is helpful. Thing is I tried to find a broker and one wanted 10 grand just to start the process, he found me. The other one I found through the internet, and although he wanted a deposit, as well, I didn't feel confident in his abilities. Finding a broker for a high end site isn't easy. If you care to recommend, please send me a PM. I would appreciate it. I am in a position now, where selling this site would bring enough to put in other projects, one in particular. I need to jump on the opportunity or it may be lost. I find every time I come up with a great idea and I don't have the funds to develop it, someone else does and in short order. Not desperate, just hopeful. Thanks for all who responded.

nomis5




msg:4098187
 7:17 pm on Mar 15, 2010 (gmt 0)

Castar,

Give Flippa a try amongst other things. You will not sell your site there through auction but you will get your site noticed. My prospective buyer saw my my site in a Flippa auction 8 months ago and has only just approached me.

At the very least it will start the education process.

nickreynolds




msg:4098941
 5:50 pm on Mar 16, 2010 (gmt 0)

Great thread nomis - keep us updated

nomis5




msg:4099019
 8:04 pm on Mar 16, 2010 (gmt 0)

Today my partner and me met the prospective buyer in a hotel cafe in Central London.

As sure as I can be he is 100% genuine. At the end of the meeting it appeared to be a done deal but I need to receive an email or phone call from him to confirm he believes the same after the meeting. It's quite possible I misjudged the situation.

His proposed method for doing the deal is a departure from what I expected (nothing too dramatic though) and I'll outline how it was done when the money is in my account or otherwise. It does present me with a couple of technical challenges and I don't do technical. Not much point in praising his directness and honesty if I get shafted after all!

Last post should be within a week.

buckworks




msg:4099024
 8:12 pm on Mar 16, 2010 (gmt 0)

We send good wishes for a happy end result!

castar




msg:4099165
 12:48 am on Mar 17, 2010 (gmt 0)

Happy for you Nomis! It's great when a deal works out.

nomis5




msg:4108097
 7:57 am on Apr 1, 2010 (gmt 0)

The deal is finalised and the money is safely in my account. I received so much useful advice in this thread, so here's a few of my experiences during the deal. Hope it helps someone. Remember, this was a low £six figure deal, a lot lower or higher and I would have a different story to tell.

1. The site was a .co.uk and the registration transfer proocess is different compared to a .com. This caught the buyer out. The domain transfer went through in a day even though I had lost the password and login to my ten year old account with Nominet. Very impressive of Nominet.

2. We used escrow dot com. The company is big and known to both the buyer and seller. Using accountants / lawyers /bonded bank accounts etc was never on for a deal of this size.

3. The escrow company promised the money would be sent within 24 hours of the buyer confirming receipt, it actually took two and a half days. Top tip - stock up on brown trousers for that time period!

4. The buyer and myself (with my partner) met for a couple hours to agreee the deal. I can't stress how helpful this was. Forget the contracts, lawyers and accountants, if the buyer won't come to you then spend the money on a ticket to visit him /her even if they are on the other side of the world. Putting a face and a character to the voice on the telephone is 100% required. Take your partner / business associte with you to the meeting. Not because that puts you in a better bargaining position but because two heads can judge a character far better than one.

5. Be mentally prepared for a couple of moments when you wake up at 4 in the morning and realise with absolute clarity that there is a way for the buyer to run off with your domain and leave you without any money. The process is not 100% water tight.

6. The escrow company only deals with domains not websites. Unfortunately you will be selling a domain and a website and you are on your own as far as the website content is concerned.

7. Particular to this deal was that the buyer wanted to host the website on the same ISP. He was rightly concerned that a change of ISP might affect the SERPS. This posed a large problem because my ISP was in the middle of a server upgrade and would not allow transfer of the website from the existing account to a new account. Why, I dont' know. In the end I cleared out my account of everything but the domain and website to be sold and passed control of the account to the buyer. That process was a nightmare because I had 15 other packages in that account, about half of them with working websites.

8. Do get some advice on taxation, it can make a huge difference. In the UK, if the sale proceeds were taken as income you would end up paying 40 - 50% tax, but if the proceeds are are taken as a capital gain (as mine will be) then you will be taxed at 18% maximum. With the current UK tax laws, that is halved to 9% tax if you claim the Entrepreneurs Allowance as I will. That difference put a hugely diffent view on a deal. The sale proceeds are effectievly your income for the next four or five years and instead of being taxed at 40%+ you can take the income as a lump sum and be taxed at only 9%. But as I say, take tax advice, this will not be the same in other countries and even in the UK your personal circumstances may give you a very different result.

9. Be aware right from the start that if you post your story on Webmasterworld or whatever, the buyer might just be a Webmasterworld reader as well! They could possibly identify you as the seller / buyer if you give some specifics about the deal, as I have done. I never asked the buyer about this so I'll never know if he read this thread. But it has its plusses and minuses depending on what you are trying to achieve.

10. Finally and most importantly you need to have built up some trust in the buyer and vice versa. If you simply can't commit to some level of trust (that's why point 4 is so important) then in my view I can't see how a deal can be done. All the lawyers and accountants in the world can't make the deal 100% water tight. All they can do is use their very limited experience of website / domain deals and take their 10% cut. My buyer turned out to be a man of his word and absolutely trustworthy.

I wish anyone else going down the same route all the luck in the world.

phranque




msg:4108313
 2:51 pm on Apr 1, 2010 (gmt 0)

thanks for the excellent summary of the results, nomis5, and thanks for letting us follow along.

maximillianos




msg:4108319
 3:02 pm on Apr 1, 2010 (gmt 0)

Congrats on the successful sale! Someday I hope to go through the same process. And this thread has been very helpful.

astupidname




msg:4117775
 8:04 pm on Apr 18, 2010 (gmt 0)

Hey nomis5, great recap, and congratulations on things working out as well as you had hoped! Now about that loan...

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