Once you’ve made the decision to sell your internet business, it’s important to tend to a few items that will help you get the most out of the sale of your business and make the process as smooth as possible. Here are six tips to keep in mind when your business is listed for sale:
1. Organize Your Data – Prior to actually posting your listing for sale, you’ll need to submit various details about your company that will be compiled into a professional presentation usually called a prospectus. Getting your statistics and financial bookkeeping organized and gathering other details like customer demographics, market share, etc. will go a long way preparing an excellent, accurate marketing piece that attracts attention and interest. Providing accurate business details at the start goes a long way in gaining buyers’ trust in the material provided and thus interest to find out more. In addition, doing the leg work up front at this stage pays off during the due diligence stage once an offer is accepted…..nothing drags out and throws a proverbial wrench into a deal more than chaotic books and records.
2. Keep Your Data Updated – Beyond the initial data that you submitted to create the prospectus for your company, you will need to provide updated Trailing 12 P&L Statements and Traffic on a monthly basis. Potential buyers will always want to see the most current data for your company. Keeping your books updated will make it easier to keep your listing updated and ultimately potential business buyers.
3. Continue to Operate Your Business – The most important thing you can do while your business is listed for sale is continue to operate the business as if you were going to keep it. Sometimes business owners have chosen to sell because they have lost interest in their website business or they just have other ventures keeping them busy. Unfortunately, if the seller does not maintain focus on the business and continue to run it to keep it stable or growing, it can decline and in some cases begin to atrophy. Since the selling price is mostly affected by the recent Trailing 12 Months Net Income, declining profits will put downward pressure on the price and all of the hard work that was put into building/operating the site may be lost in terms of reaping its final reward. It is in your best interest to keep operating your business with an eye on keeping profits stable or growth to get the best selling price.
4. Answer Preliminary Questions Timely – After reviewing your company prospectus, interested buyers will likely have specific questions before submitting an offer. Responding to these questions as quickly as possible will go a long way in keeping momentum with the interested parties and moving forward toward an offer. In addition, having a solid grasp of your business and operations will transmit confidence in an interested buyer.
5. Prepare for Due Diligence – Once an offer has been accepted, the buyer will have a specified and agreed upon period of time to substantiate the data initially presented when the business was being promoted for sale. Gathering all of your documents required for this process such as financial statements, bank statements, merchant accounts, tax returns, etc. ahead of time and having them ready to provide a buyer who has extended an acceptable offer will facilitate a quicker smoother due diligence period. Having this support documentation readily available and provided timely can instill a sense of trust and security to the buyer. Besides your data being successfully substantiated by the buyer, this more than anything will secure a closing after an offer has been accepted.
6. Be Flexible – In today’s economic environment, it is important for sellers to be more flexible with their sale terms. While most sellers would agree that their ideal offer is an all-cash deal at full asking price, these deals are not the norm. For buyers offering all cash at close, they usually offer less than the list price as a trade-off to presenting all cash. Other buyers may not be able to provide all cash at close either through their own means or outside financing. These buyers will likely offer a portion of the price as cash at close and request some seller financing for the remainder. Offering terms with a decent interest rate to a buyer is a nice way of receiving a good return on your money as well as the benefit of some tax deferral. Being more flexible with terms may also mean accepting less upfront in lieu of a back-end, upside earn-out or profit sharing arrangement.
While every deal depends on the party acquiring the business and the confidence in the person who will be taking over the reigns, being open to different deal structures such as coming down off the asking price for full cash offers, providing some seller financing or accepting an earn-out or profit-sharing arrangement, may be the difference between getting a deal done or having your business sit on the market unsold. An experienced website sales professional should be able to help navigate you through the negotiation and explain these concepts in more detail.
Following these simple tips and guidelines will make for a speedier, smoother sale process and likely ensure a deal is consummated allowing you to exit your business sooner and get you one step closer toward your future goals.
Founder and President