Website Valuation 101

 

Domain Valuation - coming soon.

 

 

 


Should you use a business broker to sell your website?

 

With the advent of several online marketplaces, places where you can reach a large number of buyers, create competitive bidding conditions and route the transaction through a safe third-party escrow do you need a business broker's help?

Business brokers cost money and it's money that's coming out of your sale price. Should you bother?

The answer is a definite maybe.

The benefit of using a broker depends on the type of business you're selling, the estimated sale price, the market and the target audience you're looking to reach. Hopefully, the discussion below will help you decide.

For lower value businesses, it almost never pays to engage a broker. His fees could exceed the value of the business. For higher value businesses, you can often negotiate a no-sale no-fee agreement.

First, what does the broker do?

- A good broker would have a qualification such as CVA or be a member of an organization like the International Business Brokers Association (IBBA), be able to value your business using several different methods and give you an idea of the price your business is likely to sell for.

- A good broker spends a lot of time trying to understand your business and the financials. He helps you put together all the documentation - for example, he may help draw up Adjusted Versions of your financial statements. Your profit needs to be recalculated for the purpose of sale and it could be far higher than what you disclosed to the IRS!

- He reaches buyers through channels you may use, but he may also have mailing lists, access to registered investors etc. i.e. buyers you may not be able to access directly.

- He negotiates with the buyers, sometimes screens buyers, and saves you a lot of time.

- They can add a layer of confidentiality to the transaction

- Buyers can be more direct questioning a broker without fear or appearing confrontational to the seller

- Help close the deal, structure financing of the sale etc.

- He keeps you legal. Many sellers aren't aware of just what they have to disclose in documents like the Sales Memorandum. He'd also have draft contracts for Letters of Intent, Non Disclosure Agreements etc. thus saving you lawyers' fees.

- A good broker can get you a lot more money for your business (even after you've deducted his fees)

 

Go direct or use a broker?

That's a decision you need to make yourself but as most brokers don't charge a fee to discuss what they can do for you, it pays to at least speak to a few first.

Finding and choosing a business broker / Website Brokers - Top 10 questions