Consultancy to help people find and buy an online business

[eddiebooth]

Hi,
Could you elaborate on this? We are looking at buying a business which has retail premises but two thirds of its income is from its online sales. We have seen their tax returns and are carrying out DD on accounts and competitors etc but your comment worries me because I wouldn't expect to hear a comment like that relating to a bricks and mortar business.
Are you referring to sites that make their money from adsense/affiliate sales etc or all web businesses?
thanks
susan

I would say tke71709's comment applies to anyone buying any type of business, regardless of size/online/brick&mortar etc. How many financial news articles are about firms saying that it was only months after their purchase of another company that they realised the scale of the problems facing them, and this is multi-million £ companies with teams of accountants doing the DD for them.
Future problems that could lead to a business losing its shirt may have nothing at all to do with the previous owners, new owners may not have the skills they thought they had and may have bitten off more than they could chew.

[petertdavis]

I've been doing this with a handful of people. More-so for fun than for making money, even though I do charge a consulting fee. It usually ends up that I put so much time into putting together the right deal for someone that it's not really that profitable. Thing is, I really enjoy the chasing a deal part of it, and I can't buy all of the deals out there that I find, so sometimes it works out well to act as a buyer's broker for someone. As some of you know, I operate specifically with forums.

[tke71709]

Hi,
Could you elaborate on this? We are looking at buying a business which has retail premises but two thirds of its income is from its online sales. We have seen their tax returns and are carrying out DD on accounts and competitors etc but your comment worries me because I wouldn't expect to hear a comment like that relating to a bricks and mortar business.

Any business is a risk, I was talking more specifically about websites though as it's a lot easier to fake traffic and the such and you may be at the mercy of the SEs. If I buy a coffee shop on a busy street I can be pretty secure in the fact that my customers will be able to find me and that a certain number of people are going to stumble onto me as they walk by. If I rely on SE traffic it's almost like living in a city where businesses are randomly moved from street to street on a daily basis due to the dictates of the mayor.

Are you referring to sites that make their money from adsense/affiliate sales etc or all web businesses?

All web businesses but some are obviously better than others. I would put a site that relies on SE traffic + adsense at the top of the risk pile and an established e-commerce site with lots of repeat traffic and a great reputation at the bottom of the risk pile.

Everything is a risk, and I am fairly risk averse so I tend to worry more than most.

[JockP]

I think this relationship works best when the buy-side broker is approached by an investor, a framework is determined regarding the best deals for the investor and then is paid to go searching.

I think the main benefits of using a buy side broker are as follows:


-Seller is introduced to a highly interested party
-Buyer finds the exact type of deal that they are looking for saving time, assisting with due diligence and can minimize risk (however nothing is ever guaranteed)

The buyer is really paying for the intellectual property of the buy side agent and then the time it takes to find a deal. Most buy side brokers will ask for a retained upfront and then some type of success fee. Some ask for a flat fee retainer however this is normally a very large sum.