Lessons I Learned Selling an Online Business For a Six-Figure Sum
I recently just sold one of my SEO companies through FE International and I wanted to share my experiences here with everyone. I’m sure a lot of you know who Thomas Smale is, but not many are probably aware of what his company is capable of unless you’ve worked with them on a website sale or purchase. I’ve known Thomas for several years but have never done business with him before.
I approached him when I was considering selling because of our relationship on some marketing forums and reputation I knew he had in this space. I really didn’t know any website brokers and I figured that he would be the best person to talk with.
To say I am pleased with my experience is an understatement. I do business with a lot of people and it doesn’t trigger me to write a post about the experience. Dealing with Thomas was a pleasure and I felt like it might benefit some people here to read a real review of their experience in case anyone is considering selling a website and looking for an honest and downright great website broker to handle everything and make for a safe and smooth transaction.
This is my experience..
The Actual Sales Process
1. Initial Consultation
The first step was to contact Thomas Smale and discuss the possibility of the sale. He asked me for some standard information related to the monthly sales volume and net profit over the years.
Once we determined that I was interested in selling, he helped me gather all of the required information pertaining to the website over the past two years. This included all financials and preparing a profit and loss statement, itemized receipts and invoices. This was something I have never done before, so it was nice to have someone there to assist and answer every question that I had.
2. Due Diligence
After completing all of the onboarding steps with Thomas I then worked directly with Ismael Wrixen, as he handled the due diligence for the sale. I have to say that what he did was far and beyond what I would have expected. I used 2CheckOut as my payment gateway for this particular website and I was having trouble getting the correct financials from the company, so Ismael stepped in and handled everything.
I actually felt bad, because 2CheckOut was a nightmare to deal with, but Ismael handled it and we ended up getting exactly what we needed from them. Kudos to him for going above and beyond.
The due diligence these guys do even before listing the site is above and beyond anything I have ever seen. There is even more to do after the sale from the clients end.. this is serious security and piece of mind for everyone involved.
3. Listing Goes Live
Once all of the due diligence was completed, David Newell took over. He is the head broker at FE International. He explained to me that they send the listing out to their exclusive list of pre-qualified buyers first – they have A LOT of buyers and investors on their books looking for new business opportunities. It is also listed on their website a few days in, which makes it available to purchase by the public. They push traffic to the listing then through a number of other sources they have.
We received an immediate offer for 100% of the asking price.. all cash! I was excited, but the buyer was very dodgy and was slow to provide proof of funds. FE International really impressed me with the way they handled him. They don’t move an inch until a prospect shows full proof of funds. This eliminates wasted time and I really liked how this team handled this time waster.
We quickly received another offer, but this time it was just slightly lower than the asking price. While a little under asking price, the buyer was serious and provided the proof of funds very quickly so FE International knew he was a serious buyer.
4. Letter of Intent
Next, a letter of intent was signed by myself and the interested buyer. It basically stated that I was indeed interested in selling and the buyer was interested in buying the website. I was also required to provide bank level proof of revenue, which was a step above the statements from 2CheckOut. This showed that the funds did indeed transfer into my bank account. It’s just another level of protection that FE International has in place to protect the buyer and I fully understood why they would want this information as well.. like I said their due diligence is impeccable.
5. Buyer Inspection, Contracts & Sale
The buyer was then given a period of time to inspect the information. They looked at the payment records, the invoices, the receipts, etc. Then a contract was drawn up and both sides were required to sign the agreement.
The actual transaction was done through escrow. The buyer posted the funds, they are then verified, and then held for 72 hours in escrow. Once the funds were verified and confirmed to be in escrow I sent over all website files and transferred all the assets to the new buyer. While the funds were being help for 72 hours the buyer is given time to inspect the actual assets. Escrow released the funds after the 72 hour mark.
6. After Sale Care
There was a lot of language in the sale terms that was set up to ensure that the new buyer had a successful transition. I was more than happy to agree to this, as I wanted the website to be a continued success in the control of the new owner.
This is something I highly doubt many website brokers do and it just shows that the guys over at FE International are all about building long term relationships. After the sale they want to make sure both sides are happy, and the terms to help transition the new buyer are something that really helps.
Most Impressive: The Attention to Detail
This was the first time I have worked with FE International and I must say that I was very impressed. They didn’t waste any time and they really stepped up when something came up that I wasn’t sure how to handle. It was my first time selling a website so I obviously had questions along the way. There wasn’t a single time that I questioned my decision to sell and list with them. David especially was really helpful, I spent most of the sales process with him so as you can imagine he faced a mountain of questions.
After the sale I received a nice package from the team, which included a nice bottle of wine with a nice message. It was a personal touch like this that really showed me how professional this company really was. I am confident recommending them to anyone reading this. They will surely be who I list future websites with.
What Contributes to a Successful Sale
Not every website is going to pass the due diligence and inspection phases. I wanted to put together a quick list of what I believe was responsible for the successful sale of my website. This is also a list of information that I am going to make sure I cover every time I launch a new website, just incase I ever want to sell it in the future.
1. Detailed Financials & Accounting
I’m really glad I kept immaculate financial records for this website. A lot of people might have really great online businesses but if they simply don’t have solid records it can prevent a possible sale. Buyers aren’t interested in buying a site that might make the amount of money the owner claims. There needs to be no doubt and the only way a buyer can be certain is by viewing detailed payment records from the merchant and the bank.
If I can give you one piece of advice, it is to use a payment gateway that keeps everything in one place. I know a lot of people just use PayPal but I prefer a merchant like 2 Check Out. The buyer can pay with any major credit or debit card or PayPal. The backend they have is great and I will continue to use them because of the smooth dealings I’ve had with them in the past.
I would also suggest that you even use accounting software like Quickbooks to keep all your expenses right there with your sales. This makes creating monthly profit and loss statements a breeze. I feel this whole sales process has actually made me a better businessman. Be as detailed as possible so you can show a potential buyer everything.. trust me, they will want to see it all.
2. Detailed Customer Records
This is very important and a point I think a lot of people here can benefit from. Even if you are selling services on a forum you need to treat your customer records the same way a major multi million dollar agency would. Every single customer (past and present) is a valuable asset and they increase the value of the business. Current customers that are currently on the books are worth the most but a list of previous customers also has value.
When a new company acquires a company they can reach out to that list of previous customers and introduce themselves as the new owner and offer a special deal to pull them back in. This is a great way to really drive sales in the beginning. A lot of old customers stop a SEO service if they shut down a site or if the competition in that nice becomes too hard. One thing I never did was to reach out to previous customers and offer deals to come back. It’s such as easy way to get new clients and now I see why that old customer data has value. It’s all about being as detailed as possible. Document everything and save all records related to the business.
3. Systemized Business Model
The easiest business to sell is one that can continue to operate smoothly when it changes ownership hands. It’s much easier for a new owner to run a business that has systems in place for everything. From attracting customers, to processing orders, to completing the work.. there needs to be a system in place for every working part of the business.
This is true for any business but especially online ones. A lot of serious buyers are ones that own multiple websites in a variety of niches. They aren’t going to have the specific skill set to operate an online business on their own nor do they want to. They are looking to acquire web assets that make money because of the systems in place.
I’m currently selling custom SEO through my blog and I’m in the middle of working with my development team to introduce several additional services people can order from my blog 24/7.. premium services unlike anything I’ve ever sold here. Every one of these has a system behind it, from the order intake to the fulfillment of the order. I’m building it this way so the blog can operate fully even if I stepped away. Who knows, if the right offer ever came around I might entertain selling in a few years. So, just incase that day ever comes I’m making sure there is a system in place for everything
4. Strong Business Relationships with Vendors, Suppliers and Staff
When you sell an online business you are selling more than just the actual website. A lot of times you are passing on business relationships and contacts with suppliers, vendors and even workers and staff. You have to have a solid relationship with everyone to make the transition smooth.
Nobody is going to want to pay money to take over a business that is operating with unhappy staff or one that is using the service from a vendor that you have a horrible relationship with. When a potential buyer is performing due diligence there is a good chance that they are going to do reference checks with your vendors. They might not even do this to see what type of relationship you have. They might simply be trying to confirm the monthly cost of a particular service, such as a dedicated server or a backend system. During that conversation the last thing you want the potential buyer to hear is “Oh yeah…that company (or owner) is a complete prick.” That could kill a deal instantly.
5. Rock Solid Customer Service
The SEO service that I sold was one that I launched 2 years ago. Part of the value came from the track record of the service. We always provided top notch SEO but also a high level of customer service as well. We always answered questions right away and if we didn’t feel a particular customer was the right fit we would let them know. It wasn’t just about making money. I was more concerned with creating a SEO service that people trusted and knew wouldn’t let them down.
If I simply let anyone come on board and ignored simple support questions it would have never grown into what it became. And I’m confident that if the service had a record of poor customer service a sale would have never been possible, even with the sales numbers I had. For someone to invest in the purchase of your website they need to be certain you have a clean record and spotless customer service will help you get there.
I wrote this to give you guys an insight into the world of website flipping on the higher end of the price tag, I hope it will enlighten some of you considering going down this route. I want to say thank you to Thomas, David and the entire team over at FE International. If anyone is interested in selling or buying, these are the guys to speak with. You can contact FE international on their website here.
I hope you enjoyed the read. Any questions or comments drop them below. Until next time.. Ciao for now!
Latest posts by Tommy McDonald (see all)
- 8 Components of an Email Newsletter That Result in You MAKING MONEY - February 20, 2018
- Forget Organic Social Media in 2018 – You Need to Pay to Play to Reap the Benefits - February 5, 2018
- 8 Ways to Drive LEADS, SALES and REVENUE by Blogging - January 29, 2018