Today’s segment is going to focus on a few tips that we would like to convey to those interested in buying a website for sale by WebsiteClosers.com, or by any other brokerage. To begin with, we recommend you consider the opportunity to have a website broker, attorney or other consultant assist you with any acquisition transaction. While you may be the best negotiator you know, you’re always going to be at a disadvantage when representing yourself because as the buyer you bring emotion into the deal – and since you’ll be working with the Seller long after the deal closes, emotion is the last thing you want in the deal. By using a third party, like an Internet Brokerage, an intermediary can help steer you in the right direction, help identify negotiable touch points and help enlighten you to market and lending standards. No matter how experienced you are, attempting to walk down the road of buying a website is a difficult task, especially if an SBA backed lender is going to finance the deal. The deal structure, contract and process needs to be in line with bank and SBA standards. At WebsiteClosers.com, we’ve closed a very large number of SBA-backed deals, so we know what to expect and how to structure a deal to ensure that it passes all rigorous stress tests.
Regarding the negotiation process, it can seem quite daunting if you are new to deal making. Chances are that there will be a number of bright individuals involved in the process, and when buyers are negotiating the deal, they might feel threatened and less likely to ask the tough questions – and demand ALL the answers. But when handled correctly, in our mind, negotiations are a very health part of the transaction process. The reason we say this is because a good business acquisition is never lopsided towards a single party. And negotiation aren’t always about giving in – it’s more about finding a resolution and solution to all deal points in a way that is respectful, cognizant of party desires, and fundamentally, the best solution to get the deal through to closing.
So the following are a few thoughts on preparing to negotiate the purchase of an Internet Company, whether it be a straight eCommerce platform, Amazon Seller Central Account, Software Application, or some other Digital Asset – all preparations tend to follow the same basic trends:
Before beginning negotiations, get as much financial data as possible and run your own numbers to determine the highest purchase price you’re willing to spend on the deal.
Once negotiations start – just focus on the 2-3 biggest picture items that have cropped up as deal issues. You’re not going to win every deal point, but understanding where you can give and where you need to win is critical right off the bat.
Don’t come in with a low ball offer. Again, all of this is of course our opinion based on our experience, but low ball offers, especially in the Internet Sector, never get anywhere and will usually end up making you look bad. Make sure the offer is realistic because good Internet businesses do not stay for sale long. Our good listings usually go under contract within 1 week of us receiving them.
Line up the professionals you want in your corner. This will include attorneys, accountants, business brokers and tax advisors. All or one can in some fashion help you through the process of purchasing a business.
Prepare a smart list of questions for the first phone conference with the Seller. Try to understand why the business is being sold, what the learning curve will be for a buyer, whether other buyers are in the mix, and what opportunities the Sellers sees for growth.
Try to understand the Seller on a personal level. While the whole process should remain professional, it is critical that you have a great working relationship with the Seller because in virtually all website acquisitions, the Seller and Buyer need to communicate with each other for many months or years after the transaction closes. By bringing things to a personal level, you are in a better position than other buyers because people tend to trust those that are open enough to talk on a personal level.
Do not get emotional. We know how hard this can be, but just like with any other business deal, emotions should play no part in negotiations. Both sides are always going to assume they are in the right, and the “need” they have is important – but the fact is that both sides are going to have to give up something to make the deal happen, so digging in your heals or snapping when a deal point is lost is never a good way to get to a closing. If you and the Seller are not communicating well, something that we find helpful is to have the broker on each side communicate through deal points – then once the biggest issues are out of the way, the Buyer and Seller can begin talking again.
Don’t let minor issues get under your skin. Everybody is different, and everybody has their own wants in life. And when it comes to selling a business you have created, you tend to have certain goals you want to achieve in the sale. Try to understand these big picture items and try to stay focused on them. Minor details slow the process down and annoy – focus only on major deal points.
Don’t be afraid to stop the process if the deal isn’t going in the direction your want it to. Talk to your broker about alternative deal structures that might help get you and the Seller where they need to be.
The Internet Business Brokers at WebsiteClosers.com are worth their weight in gold when it comes to deal making and negotiations. If you are contemplating the purchase of an Internet Company, we highly recommend that you give us a call to allow our brokers to help you with the process. Whether it’s a listing we own or not, we can help. We invite you to call or email us at [email protected] or toll free at (800) 251-1559. We will give you a step-by-step approach to our methods so that you have absolute confidence in our ability to represent you in the purchase of a digital business.