An entrepreneur rarely starts a project with the idea to sell it. However, this is a frequent outcome and there are many factors that affect the final decision and the price is just one of them and it is not even the leading one.
Faster development of the project – If you try to realize your project on your own, you will have to fight against many giants that have already established a position in the sector and often the war against them may seem lost beforehand. When your business is acquired by a bigger group, it will take advantage of all of the group’s benefits – cheap advertising, access to millions of consumers, statistical data, contacts, and unlimited experience and know-how.
Realizing the project’s full potential – Thanks to the power of the big company supporting your project, it will have the chance to develop its full potential. If in the past you used to worry about the traffic because of the load your servers would have to endure, after the acquisition, this problem will be solved immediately when you start using the well-developed hardware infrastructure ready to endure traffic of millions of consumers a day or even an hour. If in the past you used to struggle with insufficient time, people, and money to develop some of your ideas, the sale of your business will manage to provide this resource. Every person, who has created something, wants to see it in its complete splendor, no matter whether they own 100% of it or hold just a minority share.
Increasing the revenues – After the improvement of the functionalities, hardware infrastructure, and increased number of consumers, it is logical to enjoy an increase in the revenues. If your deal was not for 100% of the ownership, you are directly interested in this because you will receive a share of the profit every year, while in case of a positive development it may turn out that 10% of the profit you get after the acquisition of your business is much more than 100% of the profit before you sold it.
Financial stimulus – Even if the website is something that an entrepreneur has invested much of hard work and emotions in and there is a strong sentimental bond, it is possible that the financial expression of the proposal is so good that in the end, common sense would prevail over emotions.
Why do companies purchase websites?
Theoretically, big corporations with tens of websites, hundreds of employees, and already well-established strategy, processes, and perfectly trained teams can create whatever website they want and smash the rivals that are facing a deficit of everything that the big company has in excess. The question that all entrepreneurs ask themselves is why instead of developing their own new project big companies want to buy theirs? There are many reasons and they can be generalized this way:
Market share – When a certain company acquires your website, it increases its market share on the very next day. Your consumers, no matter how many they are, become their consumers. Your sales become their sales. This is important because the competition among big groups is severe and the acquisition of a single business may boost their market share with one to tens of %, which can be presented as a serious success before their investors. The segment your business is positioned in is very important, too. If the company does not have a good position in a certain segment, the acquisition of a good website available for sale will give it a good advantage.
Lack of ideas – Corporations suffer from a serious lack of ideas. This is explained with the fact that the machine is too clumsy and there are so many stages between the idea and its realization – approval, consideration, analyses, and prognoses, etc., that at one point it becomes old and useless. Another factor is that there are rarely any entrepreneurs in big corporations. They hire employees, who want to work on an eight-hour workday and think as little as possible. The discouraging factor of the long processes bears its effect, too – if someone knows that they can do something in just a month but following the company’s processes and procedures – it will take a whole year, they will rather save themselves the nerves and keep their idea for themselves instead of burdening themselves with one year of extra work pursuing a vague goal.
Lack of know-how – As I mentioned before, a big company can provide very good know-how to the smaller projects. This is true but big companies also lack the know-how in specific fields. In the online business, things develop in months, even in weeks. You may have time to follow the changes and to be at the cutting edge and play according to it but for a company, this is something hard to achieve. You can learn much about your business from a big company, while the big company can learn much about the innovations on the market from you. It is not by chance that when acquiring a website one of the requirements is to keep the team because buying a software, brand, and database without a team that knows what to do, the project will be doomed to failure, especially if it is a specialized one, while the company does not have experience in this field.
Lack of time – If you already have a developed business, it would be easier for a big company to buy you, acquiring the software, database, brand, and already accumulated client base, instead of starting everything from scratch because time is one of the most important factors on the internet. If you have invested years to develop your own business to reach this level, a big company, even if it can do it faster because of its greater resources, will still have to go through the whole hard process that takes time, during which things may change very fast and the following adaptation may be impossible. You are an appetizing bite for big corporations because when they buy you, they immediately set foot on your market.
If you can’t beat them, join them – If in one way or another your business starts actively conquering market share from the leader in the segment, it will not be left unnoticed. There are two alternatives before the corporation that is the market leader – it can either fight against you by offering better services, prices, quality, ideas, and functionalities, which cost more resources – time and people, or to directly acquire your business. If the corporation buys your business, it eliminates you as a rival and attracts you as a partner, and also increases its market share. This way it will solve several problems without making bigger expenses than those required if it decided to take the hard road of competition.