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Selling process

How does one go about selling a website?

     
1:42 pm on Feb 21, 2003 (gmt 0)

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Having developed a very popular website (in its field), I'm considering selling it and using the funds to develop another business.

My question is, are there any guidelines anywere as to how one should go about selling a site? I would presume it should all be done through solicitors and the like. The price is likely to be in the region of 50,000.

Is it advisable to put a "For sale" sign on the actual site in question, or would this be considered a little amaturish?

Can anybody recommend a website where it could be advertised?

Thanks,
Phil.

1:51 pm on Feb 21, 2003 (gmt 0)

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WebmasterWorld Senior Member tigger is a WebmasterWorld Top Contributor of All Time 10+ Year Member

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Hi Phil

Welcome to WebmasterWorld

Why not try ebay?

2:04 pm on Feb 21, 2003 (gmt 0)

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I wouldn't put a "For Sale" sign on the site, with the exception of the About this site and/or Contact pages. It's been my experience that if the site consistently dominates the serps and has a good media kit demonstrating traffic (and hinting at good revenues), it will generate its own inquiries.

Be ready to defend the price, the 3-5 rule seems to be the best way to show that you have realistic expectations.

2:19 pm on Feb 21, 2003 (gmt 0)

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I agree with RC. You should also consider brand recognition and market dominance. A site that is a hub for an industry even though it might not make money could be turned into a real money maker by the right person. Domain name and traffic should be considered along with the 3-5 year rule. 50,000 is a lot. What are your traffic numbers? You should also look at any capital the website may have like multiple domain names.
3:26 pm on Feb 21, 2003 (gmt 0)

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Thanks guys. Appreciate the quick responses.

korkus2000: Traffic wise, it receives 300-900 visitors a day. Yes, 50,000 is a tidy sum, but this is only a starting figure. As the site doesn't generate any real income at present, the price is based on potential, bespoke software that drives it and high ranking google keywords. A competitor with similar traffic, but less potential earnings and a very basic layout is receiving offers around 30K, so I *think* I'm in the right area.

The domain name is a 5 character .com of a very well established brand.

4:31 pm on Feb 21, 2003 (gmt 0)

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the 3-5 rule seems to be the best way to show that you have realistic expectations.

RC - What exactly is the 3-5 rule? Does that mean valuing a business at 3-5 times earnings?

4:37 pm on Feb 21, 2003 (gmt 0)

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It means 3 year to 5 year earnings.
12:42 pm on Feb 25, 2003 (gmt 0)

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Had a look at Ebay, it seems full to the brim of get rich quick ready made websites. Any other suggestions?
1:15 pm on Feb 25, 2003 (gmt 0)

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So... let me get this right.

One of our sites will create 50,000 in turnover, and as it is entirely web driven with its own electronic product and no staffing costs we will be paying about 40K out in dividends (US$60K). Unfortunately not all to me...

Anyone really want to give us US$ 300,000 for a web business in a (computer)box? The shareholders would probably give that SERIOUS consideration.

My guess is that serious buyers are hard to find... and Lawyers are easy to pay...

Even so - the question still stands - where do you go to sell a web business if not on Ebay?

Dixon.

1:23 pm on Feb 25, 2003 (gmt 0)

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WebmasterWorld Senior Member shak is a WebmasterWorld Top Contributor of All Time 10+ Year Member

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Anyone really want to give us US$ 300,000 for a web business in a (computer)box? The shareholders would probably give that SERIOUS consideration.

Not in my dreams,

I am currently being pitched 2-3 business plans or websites a day, and not getting past the 1st page on most.

A lot of people think we are back in 1999

Shak

1:28 pm on Feb 25, 2003 (gmt 0)

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That's what I thought Shak.

I'll just keep banking the money then :)

I don't see how a busy site without a revenue stream will be valuable Phil. If it CAN be turned into a money maker, surely it is best for you to do so?

Gotta be easier than negotiating with hard nosed businessmen with lawyers...

3:27 pm on Feb 25, 2003 (gmt 0)

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Receptional: I simply don't have the time or "go get 'em" style that's needed to push it forwards. At the end of the day, I came up with a good idea, wrote the system and people are using it. I'm more of a techie type than a salesman :) In the right hands, it will make money, just not mine.
3:31 pm on Feb 25, 2003 (gmt 0)

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Phil,

I might have got it completely wrong here, and if so I apologise.

but is this your project:
[webmasterworld.com...]

Shak

3:34 pm on Feb 25, 2003 (gmt 0)

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Shak - No!

Apology accepted :)

4:07 pm on Feb 25, 2003 (gmt 0)

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1. DO NOT put a FOR SALE sign on the site.

2. You say you have a great domain name and good traffic and have some good software. Yet you are not making any $$$. Why would I make any money if I bought it? Sounds like I would be making all the investment and taking all the risk in any potential future earnings.

3. 3-5 x zero is zero. So, the site has no inherent value.

4. Maybe the domain name itself has value. However, the domain name market is very slow today. I have 3,4 and 5 letter .com names and they are not generating offers in the USD50-75k range at the moment. 1-5 letter .com domain names will increase in value in the future of course, because these names are scarce resources.

5:03 pm on Feb 25, 2003 (gmt 0)

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Pearl,

1) No sign - I go along with that
2) I am not making any money with the site because I have effectively chosen not to. As I mentioned before, this is not the area I specialise in. Someone with the right background could turn it into a profitable venture - just not me. As an aside, the software in development time alone would have cost in excess of 50K, but this is not the reason why the site has value.
3) As above
4) I have no interest in selling the domain name and would never imagine it would be worth any more than a few hundred quid on its own.

I'm not going to post the URL, but to make it clearer, I will state that the site involves the listing of over 600 widgets (each costing between 20 - 110K) at any one time. There is currently no charging scheme in place for this service. With an audience of say 700 people a day (without any paid-for advertising), the possibilities for revenue are clear. But yes, as with any venture, there is a risk of failure.

6:00 pm on Feb 25, 2003 (gmt 0)

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Phil,

I'd agree no listing on the site, my guess is your best path is to come up with a sales sheet where you quantify (from the buyers perspective) the individual values they are getting with the purchase.

300 visitors / day = 9,000 per month

Get an average Overture bid amount for the traffic value,

If you are capturing a database of visitors, those are also worth something in relation to the bid amounts on the keywords

Not sure what the software is and if you are giving them a license or they will "own" the software exclusively ... but try and come up with a value on it as well

Don't write-off ebay too fast, granted they have alot of crap, but they also get decent stuff that goes through there and sells for amounts like you're talking about.

Added - Are there any other sites that sell the same widgets? If so do they have an afffiliate program?
You may also want to do some searches at Google for selling a website, and see about posting it for sale on some of the results

Your best plan of attack may be to lease the traffic to another site, ie; if your keyword was casinos and people are paying $10 per click you could start contacting sites paying that amount and offer your traffic at a substantial discount

[edited by: jbauder at 6:02 pm (utc) on Feb. 25, 2003]

6:01 pm on Feb 25, 2003 (gmt 0)

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>Anyone really want to give us US$ 300,000 for a web business

Yep. I know a WebmasterWorld member who turned down US$ 200,000 last Fall for only one site from his network. The deal was with solid, known resort site developers, and it would have been more than 5x revenues (for that site, when considered separately from the network). One consideration is whether or not the revenue stream ports well with the move, or if it requires key management to be on-board as well. In this case, the 2 shareholders decided to keep going to the bank themselves rather than cash out.

7:21 am on Feb 26, 2003 (gmt 0)

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Hi Phil:

Kudos for creating something so popular. It's great when ideas take off and have a life of their own!

That being said, I have a hard time imagining any business that would put money down on an unknown quantity - shareholders just hate that kind of thing - and if a big business did to that, it's a SURE thing that the site is worth many MORE times than you'd imagine. Like the site RCjordan mentioned - I'll bet if they offered 5x for it, it's probably worth 10x in the end. First rule of negiotation - never start at your highest sum. I remember reading about the Hotmail.com negiotation when it was sold to Microsoft...the MS lawyers came in and started bidding at $10 million. Only the owner himself deal with them. He sent them home immediately. In the end, he held out for some insane amount, over $200 million for sure, possibly as much as $400 million... while that was a "bubble" property, the point remains the same...MS started bidding for it at only $10 million!

But I digress: how to solve the problem? Simple: rent it out, just like someone would rent out or lease out a restaurant space or business space!

Let someone come in and "take over" the site for a specified period - say one year - let them try to generate revenue from the site. And either split the costs of running it with them & the profits, or demand a % of every sale that happens.

This might solve the problem of selling it altogether, if you see money from it. Or this firm might purchase it from you. But even if they don't want to buy it off you in a year, you'll show other businesses that it can be done, and assign a strong, "real world" value to it.

In any case, this is an option you can reserve for negiotation, should they weaken or start to fall through...

Good luck, and let us know what happens.

7:51 am on Feb 26, 2003 (gmt 0)

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All, thank you so much for all the replies so far, very helpful and informative. I had never considered renting, but what an interesting idea... Does this happen a lot in the web industry? Would be good to get in contact with someone who has first hand experience of this.
8:11 am on Feb 26, 2003 (gmt 0)

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Always glad to help out. When I stop and think about it, one of the biggest privately owned soccer sites out there rented themselves out for a three-year period to an exclusive sponsor during one of the big world cup periods. It was a great deal for both, the site kept all its content and the sponsor had fixed costs for the whole time. Sorry but I don't remember which one... this would be a variation on that theme.

8:54 am on Feb 26, 2003 (gmt 0)

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[In this case, the 2 shareholders decided to keep going to the bank themselves rather than cash out.]

I am not surprised. If I spent all my time on that one site I'd be a far richer man now than marketing other people's! But I didn't know that five years ago of course.