The increasing number of online deals fueled many entrepreneurs’ wishes to start selling their already developed online projects at exorbitantly high prices to respected internet corporations. However, the acquired websites are much fewer than those offered for sale because often the website owners simply want to get rid of a failed project and not to sell a winning and successful online business. The fact that a company has paid $1 million for a website does not mean that it is going to pay even $500 for yours. Before you sell your website (it doesn’t matter whether you will sell food or cars, or organizing events, catering), you should carefully do your homework and bear in mind the following parameters:
Attendance is one of the criteria that can most correctly show how developed your website is. The more the daily/monthly visits generated by your website, the bigger the increase of market share for the company buying it will be. It is easy to calculate what place you are positioned in, if your website is purchased, in Gemius’ and Nielsen’s category charts by installing web counters.
The number of registered consumers becomes more and more important because companies realize that the need to collect consumers’ data and databases with a high number of consumers you know something about (gender, age, location) is crucial.
It is not necessary for your website to make profit to be purchased by a big company. Still, the operating expense ratio is an important factor for the investor to decide whether to buy a certain website or not. To some great extent, this parameter determines the price. Of course, the price formation also takes into account the sales that will be realized after the website’s acquisition and the input of fresh traffic from the new internet group.
Integration with other projects
During such negotiations, it is important to know how your project would cooperate with the rest of the group’s projects. There are companies that are focused on online trade, some – on online media, while others – on merging price comparison websites. This is a decisive factor when a company considers whether to buy or not.
How do things happen?
TeenProblem.net – a story in first person
Usually, when you set foot on the market field of a big company and attract its attention, you may expect a phone call with a purchase or partial acquisition offer. Sometimes, this may happen in the very first months of a project’s development or it may take years until you attract the needed attention. It is also possible that you make the decision to sell and inform the possible buyers yourself.
When we decided to sell the TeenProblem.net website in 2007, we announced it in an email sent to a concrete company at 11 p.m. At about 10 a.m. on the next morning, we received a phone call from Investor.BG with an invitation for a meeting. We met at about noon and discussed our plans.
The interesting part came a few hours later when we had a meeting with an advertising agency to renegotiate their commission on the advertising sale on our website for next year. They already knew that we were out for sale and even what company we were under negotiations with. But they also knew about other companies, apart from Investor.BG, which had not called us yet. Over the next few days, our phones were blown up – all kind of companies willing to buy our website were constantly calling my partner and me. We shortlisted the candidates to four companies, two of which dropped out at the first stage after we announced the sum we wanted. Investor.BG was competing with the other buyer until the very end and there were even moments when while we were in the conference hall of one of the companies, we continued negotiating with the other on the phone. Under severe tension and full blast Investor.BG won us over and the deal was finalized in less than three weeks after the first email we sent them.
Knigazateb.com – a story in second person
While I was working on my first book One Click Away, Hristo Blajev and Alexander Krastev – the owners of the Book for You website, not only helped me in the publishing but also asked me for advice as a person, who has gone through several acquisition deals, especially in the field of websites. At that time, a big online store had expressed interest in their young project. It was a proposal hard to resist. They were faced with the typical concerns in such deals: How can one part with something they have created with so much pleasure and enthusiasm? Is the current offer the best possible out there? What should they keep their eyes open for in such a deal and how should they proceed?
The buyer in question was Ozone.bg – a website with an already established good position in the gaming sector had decided to develop a new field with a focus on book trading. The boutique online bookstore Book for You attracted their attention with its fast growth and high-quality services.
The result – the two parties agreed Book for Your to merge into Ozone.bg, while Alexander Krastev and Hristo Blajev would continue working there as consultants recommending interesting book titles. The deal was officially announced at the Spring Book Fair in 2013. By tradition, during Ozone.bg’s participation at the first book events in 2013 and 2014, the company was not focused on direct sales but rather on attracting consumers’ attention to the brand and encouraging them to visit the online store, which they did by giving out discount codes.
In this concrete deal, there were several elements that favored its realization. The Book for You website emerged at the right time and place and gained speed at the time when a bigger player mulled setting foot in this concrete segment. Acquiring some of the biggest rivals would have cost millions and that was why the smaller but well-developed and dynamic business, like Book for You, was the better option. This deal gave a good and stable push to Ozone.bg’s new book trading initiative, which, under a good redirection of consumers from the first website to the new one, would bring real orders and sales from the very first day.
Interest even when at loss
It is not necessary for your project to make huge profits to grab the interest of possible buyers. Usually, the purchase is done with the purpose to realize concrete goals set in the buyer’s strategy. Even if your business is at a loss and there is no chance to turn the business around into a profitable one, it may be very attractive for acquisition because it may have other parameters that the buyer is interested in.
Traffic generator – If you have a website that generates huge traffic and hundreds of consumers visit it every day but, for one reason or another, its advertising space is unsellable to end-clients, it does not mean that your website cannot bring fresh traffic to the rest of the websites of the buyer. Once it acquires your project, the buyer starts an aggressive promotion of its other websites thus boosting the number of visits and impressions in them and starts selling more advertising volumes there. This way, your seemingly unsellable website starts making an indirect profit and contributing to the development of other projects of the company.
Strategic project – Although not making any profit, your website may attract serious interest on behalf of a buyer that has long-term plans for entering into a certain internet niche you have no idea about. For instance, a big tour operator, which is setting foot on the local market, may decide to acquire your tourism media. Its major purpose is to have a media that promotes its products and services when it starts its business. This way, even if the media is at a loss, it will be of no importance for this investment because it will bring indirect revenues and benefits to the investor.
Database purchase – For instance, if you have a social network or a website where, for one reason or another, consumers are registered in, you already have something to offer for sale, even if you have not invested a single penny in this website. This is the database. The company that buys the website will obtain the right to process thousands or even millions of registered consumers. The more information you have about these consumers, the more valuable the database is.
As I already explained, information about consumers is the key to success for every single online business. No matter what type of a website you have, the new owner may use the database for advertising campaigns or other activities connected with its other websites. The information you may have in your database may not be comprised of consumers’ data.
For instance, you may have information about the feelings and moods of the two genders when choosing a holiday destination, information about buyers’ behavior when using concrete marketing instruments, or at least you may have collected a database of all types of airplane model brands and their specific characteristics. You may be surprised but, me personally, I have paid a lot of money to get a database for the airports around the world, bus brands, airplanes, hotels, and categorization, only for the realization of a single software product. The truth is that one man’s trash is another man’s treasure. And the sooner you learn how to use every single bit of your business to make money, the faster you will earn your first million.
More on selling your online business, here.