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Thread: Can anyone share their experience of Flippa's Deal Flow?

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    Moderator Kay is a Premium Member
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    Can anyone share their experience of Flippa's Deal Flow?

    It seems to be increasingly difficult to source good sites to buy at the higher end of the market. Flippa's Deal Flow looks like an attempt to solve this problem.
    https://flippa.com/dealflow/

    It's a way to put premium buyers in touch with sellers of quality sites.

    Has anyone used it? What did you think of it? What did you think about their pricing?

    If your site is accepted into Deal Flow there is no listing fee. You’ll pay a 10% success fee. Buyers pay a $1,000 finders fee.
    Please share your thoughts and/or experience.
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    That's expensive! As a seller this seems like a good deal for those hard to sell sites, I think I'll try it at some point.

    I guess this could be a reasonable arrangement for buyers who have significant funds and little time and want to get into sites investing by buying some preapproved sites by flippa.
    Last edited by Kay; 20 January 2014 at 2:24 am. Reason: change small error at poster's request

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    Moderator Kay is a Premium Member
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    ...buyers who have significant funds and little money...
    Michael, is that what you meant to say? (I can edit for you if not.)

    ...want to get into sites investing by buying some preapproved sites by flippa...
    Yes, but I would like to know more about their pre-approval process, and what's involved. I've never used Deal Flow so I'm getting my info from Flippa's site.

    Flippa will review your site and its verified traffic to ensure it is what our buyers are currently looking for and is in line with our terms and conditions.
    I think the seller has to enable them to see Google Analytics for the site. Is this not what they use on the ordinary listings which include "verified traffic"? As I'm sure you know, Flippa's definition of "verified traffic" doesn't tell you the full picture - or even come close.

    Other than that, they don't seem to be giving away any information about the site selection process.

    I thought the Deal Flow idea was more about keeping out the tyre kickers and accessing the more serious buyers.

    Flippa has hand-selected a small group of buyers who have expressed interest in purchasing sites at the high end of the market. They have a range of interests and are actively on the market for great online businesses.
    "Hand-selected" sounds good, but who is selecting them and how? What exactly is the review process to be included in the hand-selected list? They don't seem to be telling us that either.
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    Quote Originally Posted by Kay View Post
    Michael, is that what you meant to say? (I can edit for you if not.)

    Yes, but I would like to know more about their pre-approval process, and what's involved. I've never used Deal Flow so I'm getting my info from Flippa's site.

    I thought the Deal Flow idea was more about keeping out the tyre kickers and accessing the more serious buyers.

    "Hand-selected" sounds good, but who is selecting them and how? What exactly is the review process to be included in the hand-selected list? They don't seem to be telling us that either.
    Hi Kay, I meant 'little time' of course.

    I applied earlier, back when they just got that started and was approved quickly, but I was really discouraged by the high fee, so didn't follow through. Looks like I have to reapply now, so I'll let you know how that goes.

    I think the dealflow idea is to help flippa make more money Doesn't mean that it's a bad idea though, for example I know many buyers welcome the additional verifications, such as the centurica reports.

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    Kay (20 January 2014)

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    Moderator Kay is a Premium Member
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    It'll be great if you report back with your progress. Thanks.

    I've also heard that many buyers welcome additional verifications. I guess the idea is to give the buyers more confidence that they're not buying duds and, in the Deal Flow case, that they're buying from "hand-picked" sellers.

    In theory, this all sounds like a great idea. However, I'm not sure that's how it works in practice. Flippa's use of the word "verified" is questionable for a start. IMO, it gives buyers a false sense of security to describe something as being "verified" without telling us what they mean by that. I'm sure some inexperienced buyers will take "verified" to mean that they can rely on the information. As far as I can see, they might verify that a site's traffic exists, but they don't delve deeper into the the process to see if it has been artificially inflated by some means. It may lead the buyer into thinking he's safe from being cheated - which is far from the case.

    I'm also concerned that the less experienced will confuse Flippa's verification with due diligence. Perhaps Flippa could make it clearer that these verifications are only a starting point prior to moving into the due diligence process.

    But it's all very well speculating here about what they mean about "verification" and "hand-picked". It would be much better to get the answers from Flippa themselves. I had thought they kept an eye on EP for mentions of themselves. Certainly Ophelie did regularly. Tim, her replacement, is also a fairly regular visitor here so it would be good if he would chip in with a few explanations and answers to some of our questions. I don't know if there's a reason why they're being secretive, but it's difficult to make any assessment of what they're offering when they're not telling us what that is.
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    Hi everyone, Would love to chat Deal Flow in more detail [[Edit by Kay: contributing to discussion is fine, touting for business isn't]]


    In terms of the details of Deal Flow;
    Before a listing is accepted into Deal Flow, we put the site through a manual review process. We have a conversation with the seller, verifying a few details including traffic stats, the seller's identity as well as analysing their financials and overall business to ensure it meets the criteria of our buyers. All of our buyers have told us exactly what their looking for and those details are what we use for the basis of our review.

    The idea is for us to do bit of the leg-work for our Deal Flow buyers, hopefully freeing them up to spend more time evaluating quality listings rather than searching for them. Each week we serve up our current Deal Flow opportunities directly to them via email.

    In terms of the details:
    1. Each buyer is still required to do their own due diligence on each opportunity and in the event of a successful purchase via Deal Flow, we charge each buyer a $1,000 finders fee.
    2. From a seller's perspective; it's free to list through Deal Flow and we take a 10% success fee. We provide a dedicated broker from start to finish for each sale and a Deal Flow listing runs for a period of 14 days.


    The benefits to the sellers are;
    a) Access to a group of pre-qualified, high-end buyers
    b) The privacy provided by a Deal Flow listing
    c) A dedicated broker to manage the transaction


    The benefits to our buyers are;
    a) Exclusive access to quality listings that don't appear to the general public
    b) A team that understands exactly what they're looking to acquire
    c) High-end listings delivered directly to your inbox


    I hope that explanation is clear enough, if you have any further questions [[please ask on this forum]]
    Last edited by Kay; 21 January 2014 at 1:57 pm. Reason: received complaints about excessive self-promotion

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    Hi Tim,

    Thanks for joining in. But there are still some things which are not quite clear.

    Before a listing is accepted into Deal Flow, we put the site through a manual review process. We have a conversation with the seller, verifying a few details including traffic stats, the seller's identity as well as analysing their financials and overall business to ensure it meets the criteria of our buyers. All of our buyers have told us exactly what their looking for and those details are what we use for the basis of our review.
    What is meant by "verifying traffic stats"? Is it just a case of verifying that the traffic exists? Does Flippa go further and verify anything about where the traffic comes from? Given that some traffic sources are more desirable and sustainable than others, it would seem to be at least as important to look at the source of traffic as it is to look at the overall amount of it. If Flippa is verifying only the amount of traffic, then this doesn't give the buyer the reassurance he seeks and which he possibly believes he's getting from Flippa's "verified traffic stats". Could it be made clearer what exactly "verified traffic stats" means so that buyers don't make any wrong assumptions and rely on these figures for making investment decisions?

    What is meant by "analysing financials"? What does the analysis consist of? Who is doing the analysing? Is it done for the sole purpose of checking that buyers' criteria are met, eg price range, annual profit, amount of ongoing investment required, etc? Is there any investigation into how reliable these figures are and whether they provide a true picture of the state of the business? Have they been analysed to identify any creative accounting or other financial jiggery pokery? Can the buyer rely on these figures to make his investment decisions? Similar questions about the overall business - what does analysing the overall business consist of? Market share, sustainability, stage of business growth cycle, or what? Flippa seems a little vague on this point.

    Yes, I know you've already said that the analysis is done according to the criteria of the buyers, but this doesn't tell us very much about the extent of the analysis. For example, a buyer might say that he wants to buy a business with a net profit of $10k p/a. This figure could be "verified" by anyone - a quick look at the P&L should do it. But that profit figure doesn't give any information at all about how the profit is made, what it consists of, how sustainable it is, and all sorts of other information which is required for investment purposes. Such an analysis would require the time of an experienced professional, and is unlikely to come cheap. Does Flippa provide this or does it merely filter and select sites according to the sellers' claims without any verification of the true picture hiding behind the figures?

    The idea is for us to do bit of the leg-work for our Deal Flow buyers, hopefully freeing them up to spend more time evaluating quality listings rather than searching for them. Each week we serve up our current Deal Flow opportunities directly to them via email.
    This sounds like a great idea. There's no shortage of premium buyers ready to jump at the chance of buying good quality sites. I expect that buyers will welcome it with open arms. Isn't this very similar to what Justin Gilchrist was/is doing with FlipFilter, ie filtering out the rubbish and finding the gems worth investigating further? Perhaps Justin - or one of his associates, Bryan? - can tell us if FlipFilter is already providing this service. I know it was very popular and well-respected, but I'm not up to date on what FlipFilter is providing these days. Could FlipFilter be used as an alternative to Deal Flow?

    Compiling a directory of premium buyers is easy. Several EP members already do it, eg the brokers here. EP could do it if buyers want it. The problem is trying to find people selling such sites. And this is a BIG problem. Where does a buyer go to find good quality sites for sale? Has anyone got any answers? (Yep, I know some of the answers too, but it's perhaps not something that one would want to share with everyone and have their sources plundered.)

    Thank you for the list of benefits of using Flippa's Deal Flow. It includes mention of dedicated brokers and a team.

    Are these people Flippa employees or contractors/"partners"? How are the non-employed brokers and contractors selected? How does a broker get on Flippa's list of partners or preferred brokers? Does Flippa take any steps to ensure that there are no conflicts of interest between the contractors' own businesses and their work for Flippa?

    Does the team do the "hand selecting" of premium buyers? What is involved in the selection process? How does Flippa pre-qualify these buyers?

    Oops. Lots of questions again. I hope you'll be able to answer them for us.

    And one more thing...On a personal note, are you related to Justin Cooke of Empire Flippers? I'm just curious because you have the same surname and share several interests in common.
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    Wink

    Quote Originally Posted by Kay View Post
    Hi Tim,

    Thanks for joining in. But there are still some things which are not quite clear.

    Always happy to Kay.



    Quote Originally Posted by Kay View Post
    What is meant by "verifying traffic stats"?
    Sellers in the program add us to their Google Analytics account (or similar service). Flippa looks through all the traffic numbers, check the location and the source of the traffic. If there’s anything unsavoury or shady, they won’t be able to continue in the Deal Flow program. Any auction allowed to list into the Deal Flow program will need to undergo this, as such their traffic stats will be verified by Flippa staff.

    Quote Originally Posted by Kay View Post
    What is meant by "analysing financials"?
    For the financials, the profit and loss statement from the previous 12 months is combed through. We also demand and review proof of revenue documents. Staff members ask questions about where the various forms of revenue comes from. As with the traffic, if there’s any thing that doesn’t quite add up, they’ll be removed from the program before anything goes live.

    Quote Originally Posted by Kay View Post
    Thank you for the list of benefits of using Flippa's Deal Flow. It includes mention of dedicated brokers and a team.

    Are these people Flippa employees or contractors/"partners"? How are the non-employed brokers and contractors selected? How does a broker get on Flippa's list of partners or preferred brokers? Does Flippa take any steps to ensure that there are no conflicts of interest between the contractors' own businesses and their work for Flippa?
    The Deal Flow team are Flippa employees part of our expanded team in Melbourne, not contractors or outsourced staff. Flippa isn’t working with any other brokers on Deal Flow, everything is coming from us. There’s no risk of a conflict of interest.

    Quote Originally Posted by Kay View Post
    Does the team do the "hand selecting" of premium buyers? What is involved in the selection process? How does Flippa pre-qualify these buyers?
    Buyers come into the program in two ways. The first is we invite people in after reviewing over 4 years of sales data on Flippa. The second is people apply to join. We then have a Skype/Hangout/Facetime chat with them and ask them a series of questions. If they make the grade they are invited to join the program.

    Quote Originally Posted by Kay View Post
    And one more thing...On a personal note, are you related to Justin Cooke of Empire Flippers? I'm just curious because you have the same surname and share several interests in common.
    As far as I’m aware there’s no relation between Justin and myself. But you're right, there's a lot in common! He splits his time between the US and Asia and I’m very much an Australian, however I do find myself in Jakarta and Singapore a lot these days!

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    Moderator Kay is a Premium Member
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    Hi Tim. Thanks for joining in again. But there are still some things which are not quite clear.

    Are you getting a feeling of deja vu yet?
    I'm starting to feel like I'm pulling teeth.

    Quote Originally Posted by tbcooke
    For the financials, the profit and loss statement from the previous 12 months is combed through. We also demand and review proof of revenue documents. Staff members ask questions about where the various forms of revenue comes from. As with the traffic, if there’s any thing that doesn’t quite add up, they’ll be removed from the program before anything goes live.
    Only the last 12 months? Therefore no profit history or means to extrapolate from trends? No look at longer term performance? I guess you expect the buyer to do this as part of their DD process. Is it usual to filter and select sites to show buyers based on such a short time, ie only one accounting period?
    You said the P&L is combed through, yet you only mentioned income and not expenditure. Do you also demand and review expenditure documents in the same way as you do income documents? Do you check that the amount of expenditure under various cost headings matches the type of activities you'd expect as being normal to run such a site? Otherwise it would be quite easy for the seller to understate the expenses (and thus overstate profit) by not including these costs in the P&L.

    You mentioned in your earlier post that, as well as financials, Flippa also analyses the overall business. I asked what that involved:

    Quote Originally Posted by Kay
    Similar questions about the overall business - what does analysing the overall business consist of? Market share, sustainability, stage of business growth cycle, or what? Flippa seems a little vague on this point.
    Can you please tell us what Flippa's overall business analysis consists of?

    OK, that's me done on the questions for now.

    Thanks for the info about you and Justin Cooke not being related. As well as everything else, you're both in the same line of business! Names can cause confusion sometimes. There's an author of bodice ripping novels with the same name as me. It's not unknown for people to ask if I wrote them. No way. I did not write "Slave to Passion" or any other stuff like that.
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    Hi Kay,

    We do our best to be as strenuous as possible. We'll comb though all the data available to us, but we make it clear this does not replace due diligence by the other user. Anyone spending tens of thousands of dollars, even hundreds needs to do this their-selves.

    It's rather hard to define parameters of our own research and due diligence as each seller and website will come with different information, paperwork and proofs. But as we're positioning this as a premium brokerage service, you can be confident if there's anything we're not OK with - it won't make the grade.

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