+ Reply to Thread
Page 1 of 2 12 LastLast
Results 1 to 10 of 14

Thread: top things to look for when buying a site for a future resale?

  1. #1
    New Member
    Join Date
    Oct 2011
    Posts
    12
    Thanks
    0
    Thanked 4 Times in 4 Posts
    Rep Power
    5

    top things to look for when buying a site for a future resale?

    Lets create a checklist...

    Question: If you wanted to buy a site with the goal to resell it in 12-24 months at a profit, what are the leading items to look for?

    Here is a start...

    1. The ability to measurably grow sales/financial transactions
    2. The ability to earn more per transaction either by acquiring the product at a discount rate or by increasing the fee collected
    3. The ability to add an additional product/service to the mix
    4. The ability to locate new buyers

    What else?

  2. The Following User Says Thank You to Tamethebull For This Useful Post:

    Clinton (5 October 2011)

  3. #2
    Top Contributor grynge is a Premium Member
    Join Date
    Aug 2010
    Location
    Adelaide
    Posts
    2,719
    Blog Entries
    6
    Thanks
    1,534
    Thanked 1,783 Times in 944 Posts
    Rep Power
    59
    The ability to fix a sites coding
    The ability to easily get quality backlinks for the site
    The ability to convert more sales from existing traffic
    The ability to get loyal customers for further sales
    And they thought me broken, that my tongue was coated lead, but I just couldn't make my words make sense to them, if you only listen with your ears ... I can't get in
    Non ducor, duco

  4. #3
    Top Contributor
    Join Date
    Jun 2011
    Location
    Florida
    Posts
    919
    Thanks
    2,027
    Thanked 1,476 Times in 709 Posts
    Rep Power
    42
    The ability to analyse competition and beat competitors
    The ability to continue to serve the site's visitors
    An understanding of the semantics in the industry it serves
    A niche not declining in interest, or in the process of becoming obsolete

  5. #4
    Administrator Clinton is a Premium Member
    Join Date
    Jan 2010
    Location
    Essex, UK
    Posts
    7,615
    Blog Entries
    31
    Thanks
    4,228
    Thanked 3,026 Times in 1,683 Posts
    Rep Power
    110
    To merge two companies to make the combination bigger than the sum of their parts
    To strip a company of some of its assets, IP etc., arnd resell company separately from stripped assets
    The right location for the purchase gives opportunities to sell elsewhere at a higher price
    Inside information on the industry that you know will increase the site's value in the near term even without any work done to the site
    The ability to cut costs, move work overseas or to otherwise improve the P&L account and Balance Sheet
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

  6. #5
    aka "meathead1234" Thomas is a Premium Member
    Join Date
    Apr 2010
    Location
    UK
    Posts
    1,165
    Blog Entries
    8
    Thanks
    158
    Thanked 502 Times in 261 Posts
    Rep Power
    26
    1) Buying it below market value in the first place

  7. #6
    New Member
    Join Date
    Oct 2011
    Posts
    12
    Thanks
    0
    Thanked 4 Times in 4 Posts
    Rep Power
    5
    You are bringing up a huge topic by saying to "buy it below market value". Let's define "market value". My first thought is to define market value as a multiple of cash flow earned, and compare the multiple paid by other similar sites that have recently sold in the same industry. What do you do to define market value?

    "The ability to cut costs, move work overseas or to otherwise improve the P&L account and Balance Sheet"

    This is a great topic and is a full seminar series in itself. What are the top 'key performance indicators' you look at first that can make the biggest impact in improving one's P&L and balance sheet? Let's peel the onion back a little more, eh?

    I would first look at a.) increasing cash flow by gaining more new customers, b.) cutting product/service acquisition costs, and c.) increasing repeat transactions. (which I pretty much said in the beginning of the post)
    Last edited by Clinton; 5 October 2011 at 12:06 pm. Reason: posts merged

  8. The Following User Says Thank You to Tamethebull For This Useful Post:

    Clinton (5 October 2011)

  9. #7
    Administrator Clinton is a Premium Member
    Join Date
    Jan 2010
    Location
    Essex, UK
    Posts
    7,615
    Blog Entries
    31
    Thanks
    4,228
    Thanked 3,026 Times in 1,683 Posts
    Rep Power
    110
    Quote Originally Posted by Tamethebull View Post
    You are bringing up a huge topic by saying to "buy it below market value". Let's define "market value". My first thought is to define market value as a multiple of cash flow earned, and compare the multiple paid by other similar sites that have recently sold in the same industry. What do you do to define market value?
    I think you're spot on and it's the principle on which I built ebizvaluations.com. There are a few problems with comparative pricing I've admitted on that valuation site
    1. The data you need to make the comparisons is not available as most transactions are confidential
    2. No two sites are identical (or even comparable in the way a flat in a block of apartments is largely similar to other flats in that block). There are too many variables.
    3. A multiple of past earnings is valid only when all properties are expected by all buyers to grow in a uniform way (or stay static). The reality is that while we talk about past multiples, they only have value if earnings are expected to continue into the future. So what buyers are really doing is using historical earnings to form an expectation of future profit and their multiple is a reflection of that profit expectation tempered by the risk they perceive. All very subjective. Further, it does not take into account synergies buyers see or value they think they can add... which considerations also affect the price they're willing to pay.
    4. etc.

    midascode, a member here, and I jointly executed a purchase last week of a PR7 property that didn't get posted at any broker or auction site. We paid a price below what I think it would have sold for in open auction. Maybe that's the kind of deal meathead1234 is talking about. But those aren't the norm.

    What are the top 'key performance indicators' you look at first that can make the biggest impact in improving one's P&L and balance sheet?
    Increasing inflows and decreasing outflows, obviously, but there are a million things a good accountant can advise on. For example, accumulated loss on the balance sheet can be a big draw for some buyers for the tax reduction potential it represents. If you can accumulate loss on the balance sheet while actually making a profit - possible with a high amortisation rate, for example - you've got the best of both worlds.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

  10. #8
    Senior Member
    Join Date
    Jan 2010
    Posts
    612
    Thanks
    136
    Thanked 211 Times in 123 Posts
    Rep Power
    17
    for me it's mostly:

    1. buying it cheap
    2. being able to improve monetization methods to increase revenue
    3. being able to improve seo traffic, based on current link profile and serps

    in that order

  11. #9
    aka "meathead1234" Thomas is a Premium Member
    Join Date
    Apr 2010
    Location
    UK
    Posts
    1,165
    Blog Entries
    8
    Thanks
    158
    Thanked 502 Times in 261 Posts
    Rep Power
    26
    Quote Originally Posted by Tamethebull View Post
    You are bringing up a huge topic by saying to "buy it below market value". Let's define "market value". My first thought is to define market value as a multiple of cash flow earned, and compare the multiple paid by other similar sites that have recently sold in the same industry. What do you do to define market value?
    Precedent transactions (if available) are a pretty good indication of market value.

    I tend to just base it on gut - if I think I could sell it for more tomorrow, then I've got a good deal.

    *disclaimer - I do broker sites so have a pretty good idea what my clients would pay - no real science behind it

  12. #10
    New Member
    Join Date
    Oct 2011
    Posts
    12
    Thanks
    0
    Thanked 4 Times in 4 Posts
    Rep Power
    5
    How about doing due diligence on the seller? Doing a google search, trying to find out about past projects, what kind of groups he/she associates with, etc?

    Any thoughts / experience here?

+ Reply to Thread

Similar Threads

  1. FP - The "short" list of things to consider before buying a site
    By succor in forum Due Diligence and Gotchas!
    Replies: 10
    Last Post: 20 May 2012, 1:08 am
  2. FP - Buying a Site - what things shall I ask for and what is the safest way to get them?
    By Flippy in forum Buying a Website, Blog, Internet Business
    Replies: 9
    Last Post: 9 April 2011, 3:17 pm
  3. FP - Things to Look for When Buying Sites
    By Ryan Sorensen in forum Buying a Website, Blog, Internet Business
    Replies: 2
    Last Post: 6 March 2011, 5:29 pm
  4. Most Important Things To Verify Before Buying An Internet Business
    By Cfox498 in forum Selling a Website, Blog, Domain or Business
    Replies: 1
    Last Post: 1 August 2010, 1:33 pm

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts