A question for sell-side website brokers

[Kay]

We had a discussion earlier where some of us said that we would be quite happy to lose some of our worst customers. We'd give the newbies a chance to settle in but if, after some time, they continue to cause 80% of the work for 20% of the benefit, then that's when we hope to fire them as customers/clients.
More details here: http://experienced-people.net/forums...your-customers

I think it was Thomas who said in another thread that brokers tend to prefer to deal with more seasoned buyers. They've more idea about what they're doing and are less likely to get cold feet and pull out at the last minute.

That got me wondering how brokers pre-qualify their clients. After all, no one wants to deal with time wasters and tyre kickers.

So, would any broker like to share with us what makes a great client and what would make you hesitant to take on a new client?

[WSYSBroker]

Kay, a great question for sure! From my experience, a great sell-side client to work with is typically someone who also has a solid, established and profitable business with a history of success. Moreover, they actually want to sell their site rather than "test the waters" to try and get a price for their site that is out of the realm of possibility. These two factors, above all else, make a great sell-side client. They get it. They understand what the market can bear and they own something of value. I can go on and on about what makes a not so great sell-side client - but that was not the question here! We speak with many potential sell-side clients on a weekly basis who do not fit these two criteria and more often than not we do not take them on as clients as we only have so much capacity and only focus on curating quality listings - which usually come with quality site owners.

[Thomas]

Not much to add to Michael above as they were all great points, but we always like to do quite a lot of due diligence upfront (after they pass initial checks) which is usually a good indicator of how responsive they will be throughout the sales process. If they aren't responsive (unless they have a good reason) and transparent, we drop them. Nothing worse than getting all the way to an offer/due diligence stage and having a buyer pull out because a seller is not willing/able to provide sufficient materials to back up financial etc. claims.

It's also important to find a seller who is trustworthy - this is why all the best brokers work largely from referrals (for both buyers and sellers). The less trustworthy people are often weeded out with a rigorous pre-listing process and generally spotted from experience working in an industry that is full of scams!

As Michael said, there are many, many reasons why I wouldn't take on a client. I reject the vast majority and only take on a few.

[quietlight]

Like Michael and Thomas said above, we require a moderate amount of work from sellers upfront. This helps us determine several things:

• How well prepared will they be for the rigors of due diligence? Are their numbers precise and are they including what we would normally expect to see in financials? Are they using proper accounting software or a book keeper? Do they have intermingled operations?
• How honest are those sellers? Dishonest sellers don't want to provide information on your terms, only on their terms.
• How realistic is the seller and how aware are they of the marketplace? I don't mind taking on a seller who is aggressive (within reason) as long as they understand the consequences of overpricing their business.
• How do they feel about their own business? When you spend a good amount of time working with someone upfront, you learn a lot about how they really feel about their business. This can be insightful and helpful in helping them sell it, and it can also identify problem areas that need to be disclosed.

We have fortunately not had to turn away too much business when a person goes through most of the checks we put them through. The most common reason for turning someone away is unrealistic expectations as to what they are going to get for their site. I can respect this viewpoint as well - just because the market will pay $x for a business doesn't mean that the selling entity needs to accept that. They have the valid option of hanging on to their business instead.

[DylanT]

Have them sign and NDA of course and always make sure they have the money by asking them for credentials. If they are unwilling to give that, they are most likely broke.

Lot's of people "shopping" at the moment and not buying.