What is your exit strategy when buying a site?

[benitez17]

I have bought dozens of sites over the years, but I have never sold a single one of them. When I buy a site, I plan on holding it indefinitely, but I realize that isn't always the best idea, especially since my sites are scattered over several niches and some of them are underperforming due to a lack of attention.

Do you buy a site with the intent to sell it when it hits some profit target, do you only sell it if it doesn't meet your expectations, or do you have no real plans to ever sell your sites?

[hooperman]

...or do you have no real plans to ever sell your sites?

Bingo. I tend to buy a site with the intention of making it earn money. If it makes a profit, I'm happy to keep it. If it doesn't, I tend to abandon it and concentrate on the profitable sites and acquiring more.

I still have no real plan for the unprofitable sites (I gave one away for free to a member here). I do have a strategy for the profitable ones: keep them and get more!

[Clinton]

The smart thing to do is to have an exit strategy even before you start/buy a business, to build that exit strategy into your business plan (you do have one, don't you?), and to work towards that exit plan.

The highest price is best obtained by selling a business when it's at its peak, when you've taken it as far as you can take it. That's the best time to exit and crystallise your gains. Unfortunately for many webmasters, including hooperman and I, current market prices/multiples don't act as a great inducement to part with the business. I'm not arguing with the market - the higher risk inherent in internet businesses may justify the lower multiples, but webmasters often think, "Well, if I just sit on the site for the next 18 months, I'll make that money anyway."

In practice, I'm afraid, I don't take such a professional approach of having an exit plan and working towards it. Well, not everytime anyway. But then I'm not the typical site flipper.

I know PeterDavis is keen on the subject of buying sites, doing them up and selling them for a higher price. He's written an article or two on the subject.

[benitez17]

The smart thing to do is to have an exit strategy even before you start/buy a business, to build that exit strategy into your business plan (you do have one, don't you?), and to work towards that exit plan.

I am coming around to this line of thinking as my time becomes more and more restricted, which will be a change of strategy for me.

The highest price is best obtained by selling a business when it's at its peak, when you've taken it as far as you can take it. That's the best time to exit and crystallise your gains. Unfortunately for many webmasters, including hooperman and I, current market prices/multiples don't act as a great inducement to part with the business. I'm not arguing with the market - the higher risk inherent in internet businesses may justify the lower multiples, but webmasters often think, "Well, if I just sit on the site for the next 18 months, I'll make that money anyway."

I could have used that advice about a year ago. I have a site (actually the first one I bought when I got serious about investing in websites) that makes a few hundred dollars a month. Last year, because a new ad network was paying above average rates, it made a couple thousand dollars a month for about 6 months, and I considered selling it at that time, but decided against it because I believed (in error) that the higher rates would continue. Had I sold the site at its peak, I could have made what looks to be several years of profits from the site in a lump sum.

[hooperman]

The smart thing to do is to have an exit strategy even before you start/buy a business.

Even if I'm a holder, not a flipper? If my business is building passive cash machines, I might like to keep what I create. Or are exit strategies only good if your business is buying and selling.

I'm more of a develop and keep kind of guy, but maybe I should see every site I own as a potential sale.

[Clinton]

Kids are kids and businesses are businesses. One stays permanently yours, the other floats in and out.

I believe there aren't any "holders" and that all your businesses are available for sale. The only reason you haven't sold is because you didn't get offered enough millions.

It's simply a matter of what it's worth to you (even if you haven't come up with a figure) vs what it's worth to someone else.

[benitez17]

Clinton, you're right that every site is for sale at the right price, but I don't see much of a pratical difference between having no plans to sell a site and selling it if an unsolicited buyer comes along and makes you an offer you can't refuse.

[delta4]

I agree with benitez17. On my case i also don´t have a exit strategy. Why? I am not here to flip sites every month or year so my strategy is to keep and improve my properties. And i prefer to invest only in a small number of niches so it will be easier to me to update sites.

[benitez17]

I agree with benitez17. On my case i also don´t have a exit strategy. Why? I am not here to flip sites every month or year so my strategy is to keep and improve my properties. And i prefer to invest only in a small number of niches so it will be easier to me to update sites.

I don't intend to flip sites either, but that doesn't mean that we shouldn't have guidelines for ourselves regarding the turnover of our portfolios.

For example, I am not a day trader, but it would be foolish to refuse to sell a stock I own for any reason. If a stock drops a certain amount, has its dividend cut, or the company has a major change in strategy, it might be time to sell. Likewise, if a site is slowly dying because you can't pay attention to it, or it has a jump in revenue that might not be sustainable, it might be best to sell the site.

[Andy]

From what I'm reading here, it would be best to consider one's exit strategy before an offer is made. It looks like few in this group do this... or do you? Thus far everyone has said they tend to buy and hold. As I'm looking to buy my first site, I'm of the same mind.

I'm looking at something right now where the owner made some suggestions about what I might want to change if I was looking to flip the site, I have no intentions of doing so. To me it's a lot like the baseball player who was amazed someone would pay him for doing something he'd do for free.

Andy

P.S. (Clinton - no hard feelings if you edit this out if it's not appropriate but I can't resist adding this) If any of you guys with under performing sites would be willing to work with me, I'd be happy to take a crack at some.