Buying and Selling Websites

Tips To Make Buying & Selling A
Website Simple, Fast & Easy
Founder & CEO, QuietLight
Mark Daoust
inquiries@quietlightbrokerage.com
www.quietlightbrokerage.com(800)746-5034 FREE

2www.quietlightbrokerage.com
Founded in 2007
600+
websites & online
businesses sold
vv
$70M+
in total
transactions
$20M
on track
sales in 2015
We’ve learned a
lot about what
makes a
successful sale
and acquisition

Buyers & Sellers Follow a Predictable Process
Explore the
Marketplace
Negotiate an
Offer
…there’s more, but we
won’t explore due
diligence or closing
Preparation to
Buy or Sell
I want to step through this common process and pull 1 or 2 lessons for both buyers and sellers for
each step that we’ve observed over the course of 600 deals and $70mm+ in acquisitions.

Buyers should start small, then develop an acquisition strategy,
and sellers should focus on preparing the right documentation.
PREPARING TO BUY OR SELL

Should I Buy Big or Buy Small?
Tips 02

Should I Buy Big or Buy Small?
Go into your first purchase
knowing you could lose your
entire investment
Online businesses lose value
faster than offline businesses
Starting big can be
overwhelming & leave you
miserable
Identify natural points
of leverage
Know what you are
good at
Pool Resources
As you gain experience, buy bigger
with an acquisition strategy
First time buyers should buy small

Sellers: How Should You Prepare?
Tips 03

Sellers: How Should You Prepare for a Sale?
01
VALUATION
Get a starting valuation.
You’ll discover if you
should wait or if you
are ready to go to
market today
02
TIMING
Timing your sale has
significant impact on
value
03
FINANCIAL FOCUS
Your financials should
always be the first place
you focus. Get these
right.
04
DOCUMENTATION
Prepare
documentation

Sellers: Financials are your First Focus, Make Sure they are Right
Return on Investment
Buyers have one reason to buy your business: for a return on
investment. Learn to speak their language.
Due Diligence
Deals fall apart most frequently during due diligence. Get your financials
right to make this a breeze.
Accounting Methodology
Make sure your accounting methodology is right for the best valuation.
• Accrual/cash basis accounting can turn out different valuations
• Recording certain expenses wrong can lower your valuation
(example: website rebuild)
Verification Documents
Collect and organize verification documents
• Bank statements
• Merchant statements
• Tax returns

Sellers: Don’t Ignore other Documents
01
02
03
Financials are the most important documents to have right, but don’t ignore other documents
Contracts with vendors
Various reports on membership/clients
(collect as much as possible)
Google Analytics setup &
installed correctly

Sellers should ‘own the ugly’ and buyers should act like high
value buyers.
EXPLORING THE MARKETPLACE

Sellers: Own the "Ugly" Parts of Your Business
Tips 06

Sellers: Own the "Ugly" Parts of Your Business
There is no such thing
as the perfect website
for sale. Don't hide the
ugly parts of your
business - own them.
Don't Hide
The Ugly Parts
Buyers can handle
weaknesses. Buyers
can handle threats.
Buyers can't handle
surprises.
Buyers Can't
Handle Surprises
Buyer's will assume
the worst if they are
surprised by a
weakness
Buyer's Will
Assume the Worst
Buyers will also
question your honesty
and competency if
they discover a
significant omission.
Buyers will
Question your Honesty
Be upfront about
weaknesses. Explain
them. Explore
them.
Be Upfront about
Weaknesses
Help a buyer to
form the proper
conclusion about
your business's
weakness.
Help Buyer to Form
Proper Conclusion
?

Buyers: How to Deal with a Bad Surprise
Tips 07

Learn to act like a high
value buyer
Possible
Conclusion
Ask Seller
Make Observation
Reach
Conclusion

Why do sellers hide
things?
02
03
01
Sellers focus on metrics that aren't the same
as you need to make a buying decision.
Sellers generally don't know what
you need to make a good decision.
Sellers love to focus on their accomplishments, not
their failures
Being surprised by "ugliness" isn't uncommon. How you react to it sets you apart as a buyer.

Buyers: Keep your offers simple. Sellers, don’t rely on a bidding
war to get the best price possible.
NEGOTIATING AN OFFER

Buyers: Keep Your Offers Simple
Tips 08

There is value to building in
complexity (holdbacks, financing,
performance bonuses) into an
offer to protect against risk
Value to Building in
Complexity
Overly complex offers rarely
succeed because sellers have
difficulty identifying
their real value
Complex Offers Rarely
Succeed
Which of these is easier to
understand? Which seems less
risky? Simple offers are more
easily accepted
Simple Offers More
Easily Accepted

VS
Offer 01
• Total Offer: $450,000
• $400,000 Cash
• $50,000 30-Day Holdback
Offer 02
• Total Offer $480,000
• $300,000 Cash at Close
• $120,000 Payable Over 3 Years w/ $25 balloon
payment at end
• Performance bonus of $5,000 for each quarter over
3 years that matches or exceeds sellers last
respective quarter's net income.
• Net income shall include revenue - expenses with
expenses not exceeding seller's last respective
quarterly expenses.
Consider these Two Offers
Which of these is easier to understand? Which seems less risky?
Simple offers are more easily accepted

Sellers: Bidding Wars are Not Always Good
Tips 09

Sellers: Bidding Wars are Not Always Good
Inform all parties that there are multiple interested buyers
Give buyers an option to back out if you anticipate competing bids
Give remaining buyers a deadline to submit an offer
If two or more offers are received when you weren’t expecting,
allow all buyers to submit one revised offer. Ask them to make it
their best and final.
The Good
Bidding wars can use competition to
leverage purchase price
The Bad
• It can cause a lot of bad will (remember
that deals are made on trust)
• Buyers who lose may feel increased
leverage if the business comes back to
market
• Buyers who overpay due to bidding wars
are more likely to back out of a
transaction.
• A bidding war might be a sign that you
priced improperly
Managing a Bidding War

Want to learn more, download our whitepaper on the
5 Mistakes Sellers Make that
Destroy Website Value
http://www.quietlightbrokerage.com/5-mistakes

THANK YOU!
inquiries@quietlightbrokerage.com
www.quietlightbrokerage.com(800)746-5034 FREE

A Quick Look into the Presentation
Start
End
About Us Tips -01 Tips -03
Tips -08 Tips -07 Tips -05
Tips-04
Tips -09
Tips -02
Tips -06
About Quiet Light
Brokerage
Buyers: How to Deal
with a Bad Surprise
Buyers & Sellers Follow
a Predictable Process
Should I Buy Big
or Buy Small?
Sellers: Should you
Wait or Ready to Go?
Sellers: Financials
are your First Focus
Sellers: Don’t
Ignore other
Documents
Sellers: Own the
"Ugly" Parts of Your
Business
Buyers: Keep Your
Offers Simple
Sellers: Bidding Wars
are Not Always Good

About Quiet Light Brokerage
We Sell High Value Websites

Buyers & Sellers Follow a Predictable Process
Tips 01

Sellers: Financials are your First Focus
Tips 04

Sellers: Don’t Ignore other Documents
Tips 05

VS
Best case
Est. $150,000 tax liability leaving
$600k (absent broker fees)
Worst case
Est. $263,369 tax liability leaving $486,630 +
higher taxes on regular income
Example on Allocation
Depending on how the purchase price is allocated, a seller will pay drastically different
taxes. Here is a “best case” and “worst case” scenario for a $750,000 deal
The tax consequences for the seller
can be a deal breaker.
Larger offers ($500k+), negotiate the
asset allocation up front. Why?

Buying and Selling Websites

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