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Thread: Does anyone know anything about Centurica?

  1. #11
    Moderator Kay is a Premium Member
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    I'll leave it to others to answer for themselves. I'll answer the point you addressed to me.

    Kay, Thanks for your input and confirmation of things others have said, all of it very helpful. I do see what appears to be a contradiction in that you and others are advising me to educate myself and do it all by myself but, on the other hand, you point out that the specific information i need maybe isn't available in sufficient depth and detail.
    There's no contradiction. I - and several others on this forum - encourage you to learn DD for yourself. There's loads of info on here! There's no "specific info" that isn't available. We can give you the tools and the useful links, we can't give or teach you instinct or experience. You have to develop and earn that yourself. OK, someone can sell you a course for $xxxx to teach you. (And there are several of these around.) You won't learn any more than you can on here in the free areas, and on this forum's sister site: http://experienced-people.co.uk/

    The way you were talking earlier, I got the impression that you were comfortable doing your own DD anyway. Is there some point you'd want to clarify? Something you want a second opinion on? Ask and we'll try to help.

    BTW, what did you mean about the info you need isn't available in sufficient depth and detail? I'm sorry, I didn't understand that point.
    British Expat - helping people to live and work abroad since the year 2000.

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  2. #12
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    The way you were talking earlier, I got the impression that you were comfortable doing your own DD
    I certainly want to learn about the business I'm considering buying and i want to be as comfortable as possible with my understanding of the whole process but I emphasis my expectation that if I understand it all on an "executive level" then I should be able to hire professionals to do some important parts of the leg work for me. I'm a business man that isn't afraid of e-commerce, not an internet aficionado. I want to make strategic decisions and figure out the most efficient way to implement them not necessarily become an expert in every detail of actually doing it all. In fact, i think my time would be spent most productively doing strategic planing, developing/maintaining customer and vendor relationships, hiring the right outsource expertise and managing the outsourced activity so that i can market most effectively, optimize product functionality (this is an SaaS business) and provide great customer service. So I've gone past the purchase phase here and on to running the business but i think the same principles apply.

    what did you mean about the info you need isn't available in sufficient depth and detail?
    I was referring to what you said in your 1st post
    However, most of what I've seen until now has focused on business in general rather than DD for online business. I found similar when writing my book about buying websites - the best books, written by professionals, tended to concentrate on business in general. Mostly those which took more of a focus on online business tended to be shorter books which skimmed over a lot of the important details. Just my opinion.
    we can't give or teach you instinct or experience.
    that is the essence of why trying to do all the DD myself is unrealistic. I can't get experience any way other than by having experience and that isn't going to happen until I've bought and operated a business. Also the instinct is informed by experience so it is unrealistic for me to fully trust my instincts that are not backed by experience.

    I hope you and others can see why it makes sense for me to work with a professional in the process of buying a business. Now the question is does the professional i need exist and how do i establish that s/he is capable and trustworthy?

  3. #13
    Moderator Kay is a Premium Member
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    I don't do sales. It's the big weakness in my skill set but... I can't see any other way forward here. If you subscribe to Premium Membership on this forum, among other things, you will be entitled to receive the EP Guide to Due Diligence. There's a lot of other things in the Premium Lounge too, eg my latest book which is a guide to buying websites. Membership costs $99 per annum and comes with several other privileges.

    I completely understand if you don't want to pay $99 and if that's the case you're welcome to continue using our extensive free content - it just means that you have to do the reading and content curation for yourself.

    At the lower end of the market, you will need to learn to do DD for yourself. Those with the skills and knowledge to do DD for you are likely to cost more than the price of a website. The last I heard was that some brokers, who have the skills to do the task, charge about $250 per hour. And even then you don't have any guarantees. That's why we keep saying that DD is not a commodity which you can go shopping for. The only way to be sure is to learn to do it for yourself. By all means, if you're stuck with something you can ask us for help with a specific point.

    It's all very well being a businessperson, but that means you have to understand online business. If you can't get your head around buying a business and all that involves then your other main option is to build from scratch. Sorry, there's no easy way. Sure, you can hire someone to crunch some numbers for you but that's not due diligence.

    It's entirely up to you and whether or not you're willing to learn the ropes for yourself. If you don't want to do that, then you have to accept that the risk of being ripped off is higher. There's always a risk with any investment. Due diligence can help you to minimise the risk. It's your money - you decide.
    British Expat - helping people to live and work abroad since the year 2000.

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  4. #14
    Administrator Clinton is a Premium Member
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    Quote Originally Posted by hys View Post
    I can't get experience any way other than by having experience and that isn't going to happen until I've bought and operated a business.
    Quite correct. And you would presumably have the same expectations of your "professional DD expert". You would expect him to have bought and operated several businesses in the price bracket you're considering (unless he has operated these acquisitions he hasn't really honed his DD skills - he could have lost his entire investment on every purchase!). Or is that not your expectation? Of the people willing to sell their services you want not the people who've built what reputation they have from advising others on "site flipping", "finding sites", "doing DD" etc., but those who've got extensive experience buying and running businesses of the size and type you're looking at. Employ the former and you're a mug. Employ the latter and what you're doing is giving a competitor a good lead. I don't envy you being in the position you're in.

    One way to approach this is to identify areas of the business where you lack the expertise ...and hire professionals who are specialists in that area. So, perhaps, you don't understand coding or don't understand the particular customer acquisition method your target site uses. You could then hire specialists you trust in that area of the business operation.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    Quote Originally Posted by hys View Post
    ... if I understand it all on an "executive level" then I should be able to hire professionals to do some important parts of the leg work for me. I'm a business man that isn't afraid of e-commerce, not an internet aficionado. I want to make strategic decisions and figure out the most efficient way to implement them not necessarily become an expert in every detail of actually doing it all.
    I've been watching this discussion for a few days and I was just getting ready to make the same observation that you just made. While I have represented some clients who live and breathe the internet, most of my clients are business people who are by no means "internet people" and they have done quite well with their internet acquisitions, thank you.

    Any time anyone buys a business, they need to do their due diligence but unless the transaction is extremely small, they almost always have some help in some aspects. Of course, accountants and attorneys quickly come to mind as members of the due diligence team, but pieces of the DD are often parceled out to other experts: real estate appraisers, environmental consultants, insurance consultants, employee benefits consultants, structural engineers, etc... Even the guy buying a pub or a gas station usually has help on some aspect of the due diligence.

    Of course, the bigger the transaction, the more help someone can afford. Since most websites sell for far less than a local pizza restaurant, spending money on experts is out of the realm of most internet transactions. So that is the market where most of the advice is aimed.

    I can't contribute specifically to your question about Centurica, but if you are an experienced business person, you must know that the value of a business consists of several components and you need to decide how to evaluate which of those is most important to the business you are buying.

    In most e-commerce businesses, the two most important components are the vendors and the customers. In some businesses, one of those may far outweigh the other. If the vendors number in the hundreds with no particular vendor having a unique product, then less DD may be needed on the vendors. If one or two vendor relationships are critical, then doing DD on the vendors may be the most important.

    If the customer base is well-established and the business profits are mainly from sales to returning customers, then doing DD on the customers themselves and their satisfaction may be more important than where they came from originally. On the other hand, if new customers are the key to profitability, then finding out where they come from will be an important DD task. If they come from the internet, you need to understand not only the traffic the sources of the traffic - PPC ads, organic search, email solicitations, affiliate programmes (that spelling was for my British friends) - but also how profitable each stream of revenues is. It may take an "internet expert" to study the logs to determine the source of the traffic but an accountant may be better able to determine the profitability of the various revenue streams, assuming that the business has been properly tracking its sales.

    Those are just some examples. In other cases, it is the IP that is important. Are the trademarks protected? If the code is custom-written, is it well-documented? Are the systems as secure as possible from hackers? In some cases, a particular employee may be critical to the success, either because of customer relationships, design or programming skills, or some other unique talent.

    I could go on and on. The fact is that no particular DD "expert" is going to have the skills to do all the possible DD. I suspect that Centurica can bring talent in some of those areas but not in others. Are they internet security experts? I don't know but I suspect that is not a specific talent that they have. If the site uses Paypal and never gets customer credit card information, perhaps you don't need that skill. In other cases, e-commerce sites have been financially crippled by the impact of stolen customer data.

    Well, before I write a book in this post, I had better get back to work.

  6. The Following 2 Users Say Thank You to David S For This Useful Post:

    Clinton (28 July 2014), Kay (28 July 2014)

  7. #16
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    Kay
    If you subscribe to Premium Membership on this forum,...it just means that you have to do the reading and content curation for yourself.
    Premium might be the way to go if the information is more complete and in a logical order. I don't enjoy poking around all over the place to find and put together bits of information
    The last I heard was that some brokers, who have the skills to do the task, charge about $250 per hour
    If I use their services wisely and they know what they're doing that doesn't seem off the wall to me when I'll be paying in the low to mid 6 figures for the company and expecting returns to be in the low 6 figures with the potential for substantial growth. So who are these people that everyone has decided are unaffordable so no one is coming forward with some names?
    Clinton
    I don't envy you being in the position you're in
    I appreciate your recognition of my conundrum.

    David: Thank you. You are a breath of fresh air. I do know alot about business and I've learned a lot about e-commerce during this process. i should be able, with help, to make a well informed considered offer. I also should be able to, with help, run the business. I don't think i have to have been up to my elbows in the nitty-gritty to do this wisely.

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