Website negotiation and buying process

Website negotiation and buying process

Approbo Tech No Comment
Sell My Business

We get questions about what the actual process is to purchase a website (and many sellers are confused since this dates back to the origins of mergers and acquisitions). It’s a business like any other; the typical process applies for purchasing. For this example, we are going to use a broker scenario where they are the middle-man to the transaction.

 

Summary of the process:

  1. Broker emails out the listing(s), or you find a business through networking and outreach.
  2. Get/Request the prospectus if there is one.
  3. Do basic due diligence on the site and make sure it passes your “rules.” This includes running through SEMRush if you have it, and any keyword research you can perform.
  4. Customize and send a Letter of Intent (LOI) with your purchase price, terms, and offer. Try to spell out the main details that will be a negotiation point for the business sale.
  5. Do some negotiations back and forth probably through email; it may be quicker to jump on a phone call with all parties. This can happen before sending the LOI as well.
  6. Seller signs the LOI and returns to you.
  7. Do the complete due diligence – mainly financials, look through tax returns, P&L’s, sales data, etc. to make sure it all adds up. In the LOI you specified how much time is allotted for this, and they are not allowed to pursue other sellers (they can have a backup list but not sell it out from under you). This is where you are really looking into who the seller is as well, are they responsive? Are they willing to help you make this business work? If they go dark during due diligence, you can still walk away. Do not get too invested in a business at this point.
  8. Submit the purchase agreement with funding and closing dates, make sure financing is in place to meet the closing date. The purchase agreement should nail down specifics regarding training, payment dates, anything you think is important to finalize the deal. Often there is a deposit paid at this point that is non-refundable. This means the buyer is able to perform, and the seller gets the deposit if not.
  9. Close, fund, and post-sale transition. There is where the work beings, getting the business under your control. The seller should have documentation to help with this.

Many inexperienced buyers or sellers might want to skip right to the purchase agreement, but the issue is you don’t have any recourse if the financials don’t work out. You can add that language to the agreement, but that adds unnecessary complexity.

Interested in selling your business? Contact us and we can talk.