Posts tagged "internet businesses for sale"

The last 6 weeks have been quite a shock to most Americans and people around the world. The economic upheavals have been monumental and without precedent. In our business as website business brokers, we have seen multiple deals fall apart or not move forward as a result of the uncertainty and fear in the marketplace. Of course, in any economic swing there will be people and businesses that reap massive profits and actually thrive. However, the vast majority of people and businesses feel the effects both financially and emotionally as a result of the meltdown on Wall St and now Main Street.

In this climate, there are definitely more sellers than active buyers in the internet business sales and acquisition field. The point is - is that there are buyers! These buyers are being extremely selective and cautious and are literally cherry picking the most attractive website business opportunities available providing the price is right. Sellers with online business opportunities that are stable or still growing despite the economic malaise because of the niche they are in, stand the best probability of consummating a deal in this period. The other sellers that will succeed in closing deals will be those that are more aggressive with their selling prices.

Just like in real estate, the seller that drops his price lower than the rest of the market gets more attention and sells quicker. If you hold out too long for a premium price or average price in volatile markets, you can find that you wind up selling for much less in the long term if things get even rougher.

A year ago, the average multiple on an average website business with solid fundamentals was 3-3.5 times the net trailing 12 month profit. In this global financial crisis, average sites are tending to be moving if they are priced between 2.0 -  2.5 times the trailing 12 months all cash at close. The selling price may be higher if more owner financing is involved, which, with the current credit crunch, has become more prevalent. The risks of a further down turn are tangible, so buyers are factoring this in when making offers. As I mentioned earlier, there will be lots of good deals to pick up for buyers with good capital reserves but buyers needing financing are just not able to secure the funds to get a deal done currently. The best opportunities will still get a better multiple on their business because they are able to thrive in this environment, but the pressure from the market means that it is a buyers marketplace and sellers will need to adjust their price expectations if they want to get acquired. The other choice is simply to ride this out and hope there is a quick turnaround later in 2009.

 David Fairley

President,

www.websiteproperties.com

The year that is passing may not have many fond memories for a lot of people, but for those who have invested in an online business for sale or have sold one, it wasn't such a rough ride! In fact, now that the shock and awe has passed there is an air of optimism among internet investors and website owners. 2009 is setting up to be a great year for internet entrepreneurs. Sales offline dove by several points while online sales remained positive or flat for the most part. With more layoffs and uncertainty in the workforce more people are turning to the internet for opportunities to supplement their income or take matters into their own hands.

Overall we have seen a lot of activity in the last 6 weeks of this year and expect a surge in the new year as people follow their new years resolutions to take action. There are plenty of excellent website opportunities available so saavy buyers can cherry pick the best internet businesses. There are still a lot of buyers sitting on cash reserves too that are willing to make all cash offers but at more aggressive multiples. However, 2009 may be the year of a higher percentage of owner financing deals and as a larger percentage of the selling price because interest rates are not providing much incentive for sellers to stash their cash in a bank or CD. Other deals will likely get structured with earn outs and upside potentials built in so the risks and the rewards are spread evenly between buyers and sellers.

 In the end, the best deals are always fair and balanced where all sides are happy and feel comfortable. We at www.Websiteproperties.com will continue to strive towards fair and balanced deals for our clients while respecting our qualified buyers who subscribe to our opportunity alerts. In addition, we will strive towards representing and listing only the best, most fundamentally solid web-based businesses on the market, so buyers know they can rely on us to present exceptional and exciting online business opportunities.

 From all of us at Website Properties, have a Happy and Prosperous New Year.

David Fairley

President

Even though we are diligent in screening and reviewing our clients, their business financials and fundamentals prior to engaging them and listing their internet businesses for sale, occassionally we have some website businesses that precipitately descend in their traffic, revenues and other fundamentals during the course of selling their business.

Sometimes, as in quarter 4 of 2008, it was due to an overall sharp down turn that most businesses suffered a setback. However, many times it has to do more with how the seller is operating their business, or has been running it prior to contacting us to sell.

The most common reason for business revenue atrophy seems to be correlated with the seller's dip in focus, passion about their business or just laziness! Once their mind is taken off their website business and they are not actively working on evolving or improving it, many online businesses start to decay - some slowly and others rapidly. Too many sellers, especially ones that have created what are termed as passive revenue websites - such as a niche content site that serves up adsense ads or affiliate links that they earn commissions - sit back in cruise mode and don't continue to push the envelope and continue with their content and link building to improve their search engine positioning or even dominance.

We always counsel our clients to continue working their internet business for sale as if they were planning on keeping it and striving to hit the next elevated traffic and revenue targets. Websites for sale that show progressive earnings and traffic growth are always more attractive to buyers and sell for larger multiples in the end.

Recently, we have experienced a few listings where our clients have pretty much dropped the ball and let their online business's atrophy to the point where we can no longer get behind the opportunity and continue selling it for them in good conscience - even at a fire sale. Consequently, when it hits this tipping point, it is time for us to jettison the business listing from our current websites for sale page and file it in archives where it will rust along with other sites that met the same fate because of their truant owners that inevitably were trying to dump their business before it started the downward inertia.

To preserve our websites reputation of presenting quality internet business for sale opportunities, we regularly assess our inventory and have taken to culling the sites that no longer measure up to our standards or our educated and savvy buyers' standards who subscribe to our buyer alerts or regularly visit our website and who count on us to deliver a quality product and service.

David Fairley

Founder & President

Sometimes during a negotiation between a buyer and seller, there are definitive signs that start rearing up that lead to what is known as "deal fatigue". This can happen as early as the LOI (letter of intent) stage - which is where an initial written offer is submitted and is negotiated, accepted or rejected. It can also happen well into the due diligence phase.

In the case of the seller, it may start becoming clear that, although they may have been agreeable to a deal initially, the buyer's behavior and manner during the due diligence period may cause concerns about the future dealings with the buyer after closing. These can be anxiety about the buyer competence to manage the business (the seller's "baby") and the amount of support and maintenance that will be needed to transition the business. It can also be an attitude of nickel and diming and trying to chisel away at the agreed upon price and terms unreasonably. It also can be awareness that the buyer has unrealistic expectations or limitations they want to incorporate in the final purchase agreement that creates unnecessary risk and responsibilities on the seller that are beyond their control - such as guaranteeing specific SEO ranking, traffic and sales. The business history and fundamentals should be reason and motivation enough to make a purchase decision - which inevitably contains some risk as there are certainly no guarantees in business. Buyers need to assess the risk reward factors of a business for sale while concurrently evaluating their own skill set they bring to the new venture to determine the probability of succeeding or meeting their goals and aspirations.

Many times, these early warning signs should be weighed and a decision to walk from a deal and trust that a more harmonious deal will follow. This is much easier when the seller is not under pressure to sell or in a rush to sell. They can afford to be patient and wait for the right buyer and deal. The right deal usually means it is a smooth and fluid process where both parties are respectful and even.

 On the buyer side, when a deal is agreed upon initially and they enter due diligence, red flags can start appearing in the form of incomplete data, inability to corroborate data or financial numbers, unorganized or incomplete presentation of materials to verify the business history, and erratic or highly emotional responses from the seller. If a seller is too pushy with closing in an unrealistic time frame - like 1 or 2 weeks instead of allowing a more normal due diligence and closing period of 3-4 weeks, this may be an indication of future problems. It is important that a buyer is kept current on financials of the business and that they know the seller is focused on the business health during the process. Any signs of impatience, or excuses for abnormal discrepancies in the numbers or current sales may be a sign the business is being dumped. If too many red flags show up, a buyer should really consider moving on to find an internet business for sale where these are not present.

Business transactions are primarily about dealing with people and relationships. Buyers and sellers typically will share at least 60 -90 days in a support and training period and so building a good relationship from the start - during the LOI and due diligence phase - are good indications of how the transition of the business phase will go. Both website buyers and sellers should be choosey when consummating a deal. The easiest and smoothest internet business for sale transactions are usually the most successful for both parties. If it is not win win across the board and clean and clear it is probably a good idea to move on and wait patiently for the ideal.

David Fairley

President, www.websiteproperties.com

With the news story of the week once again shifting from political pundits discussing "lipstick on a pig" as a reality show diversion to influence silly voters to the cold hard facts that our economy is in worse shape than otherwise expected, voters as well as buyers and sellers of businesses for sale are getting a rude awakening if they were not paying attention.

We try to explain to our selling clients that part of their selling strategy, including finding that magic listing number that is fair for both parties, should be looking at the overall market condition and assessing the risks as well as the rewards of their website business model. Any prudent buyer will be considering all the elements of the market niche, current sales trends and future exposure in a weakening economy. If these are adressed up front, the opportunity will tend to have greater resilience to the swings on wall street and the ensuing 'fear and loathing' it produces to the masses in the subsequent main stream media frenzy about the latest bankruptcy.

In todays marketplace we are seeing more sellers listing while the buyers are tending to be much more cautious and choosey. Any internet business is going to be ultimately compared to other internet opportunities in terms of stability, current revenue and profit trends, current and historic traffic, the market niche the business is in, and the revenue model of the business. All businesses will be under greater scrutiny to assess their future market resilience.

As in any economic down turn cycle, there are going to be business opportunities that will thrive, remain stable and some that will be more affected. An ecommerce site selling necessities, or like a couple of our clients, products that are in high demand like alternative energy supplies, are seeing good growth, whereas a luxury goods retailer may be seeing sales trending south as consumers tighten up on their discretionary spending and start saving more.

So, these types of market conditions tend to favor the buyers because they have more choice and will ultimately cherry pick the best businesses that are showing growth, both revenue and profit-wise, despite the economy, have a predictable business model and longer history, loyal customers, strong fundamentals including good natural search engine rankings, unique and diverse product mix that is higher on the needs list for consumers, good domain name, etc.

For sellers with great established websites for sale, these market conditions actually favor your successful exit, as your website business will stack up much better against more mediocre internet businesses that are not as strong and resilient to this economic 'meltdown' as has so eloquently been touted by the mainstream media. To the shrewd investor/buyer this can often be one of the best times to snap up great online businesses at a great value.

 The cream will always rise to the top in any market but especially in tough economic times - but that means the best buyers and sellers will consumate great deals from the masses of slock that is being pitched online. At Websiteproperties.com we endeavor to represent only what we consider to be the best internet businesses available at fair market prices that insure both buyers and sellers come out winners in any economy.

 David Fairley

President , Websiteproperties.com