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Lessons I Learned Selling an Online Business For Six-Figures (Thanks FE International!)

Discussion in 'Site Flipping' started by t0mmy, Nov 20, 2015.

  1. t0mmy

    t0mmy Jr. Executive VIP Jr. VIP

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    Lessons I Learned Selling an Online Business For a Six-Figure Sum (Thanks FEI!)


    I recently just sold one of my SEO companies through FE International and I wanted to share my experiences here with everyone. I?m sure there are a lot of you know who meathead1234is, but not many are probably aware of what his company is capable of unless you've worked with them on a website sale or purchase. I?ve known meathead1234 for several years but have never done business with him before.

    I approached him when I was considering selling because of our relationship on the forum and reputation I knew he had in this space. I really didn?t know any website brokers and I figured that he would be the best person to talk with.

    To say I am pleased with my experience is an understatement. I do business with a lot of people and it doesn?t trigger me to write a post about the experience. Dealing with Thomas was a pleasure and I felt like it might benefit some people here to read a real review of their experience in case anyone is considering selling a website and looking for an honest and downright great website broker to handle everything and make for a safe and smooth transaction.

    This is my experience..


    The Actual Sales Process

    1. Initial Consultation

    The first step was to contact Thomas Smale (meathead1234) and discuss the possibility of the sale. He asked me for some standard information related to the monthly sales volume and net profit over the years.

    Once we determined that I was interested in selling, he helped me gather all of the required information pertaining to the website over the past two years. This included all financials and preparing a profit and loss statement, itemized receipts and invoices. This was something I have never done before, so it was nice to have someone there to assist and answer every question that I had.


    2. Due Diligence

    After completing all of the onboarding steps with Thomas I then worked directly with Ismael Wrixen, as he handled the due diligence for the sale. I have to say that what he did was far and beyond what I would have expected. I used 2CheckOut as my payment gateway for this particular website and I was having trouble getting the correct financials from the company, so Ismael stepped in and handled everything.

    I actually felt bad, because 2CheckOut was a nightmare to deal with, but Ismael handled it and we ended up getting exactly what we needed from them. Kudos to him for going above and beyond.

    The due diligence these guys do even before listing the site is above and beyond anything I have ever seen. There is even more to do after the sale from the clients end.. this is serious security and piece of mind for everyone involved.


    3. Listing Goes Live

    Once all of the due diligence was completed, David Newell took over. He is the head broker at FE International. He explained to me that they send the listing out to their exclusive list of pre-qualified buyers first - they have A LOT of buyers and investors on their books looking for new business opportunities. It is also listed on their website a few days in, which makes it available to purchase by the public. They push traffic to the listing then through a number of other sources they have.

    We received an immediate offer for 100% of the asking price.. all cash! I was excited, but the buyer was very dodgy and was slow to provide proof of funds. FE International really impressed me with the way they handled him. They don?t move an inch until a prospect shows full proof of funds. This eliminates wasted time and I really liked how this team handled this time waster.

    We quickly received another offer, but this time it was just slightly lower than the asking price. While a little under asking price, the buyer was serious and provided the proof of funds very quickly so FE International knew he was a serious buyer.


    4. Letter of Intent

    Next, a letter of intent was signed by myself and the interested buyer. It basically stated that I was indeed interested in selling and the buyer was interested in buying the website. I was also required to provide bank level proof of revenue, which was a step above the statements from 2CheckOut. This showed that the funds did indeed transfer into my bank account. It?s just another level of protection that FE International has in place to protect the buyer and I fully understood why they would want this information as well.. like I said their due diligence is impeccable.


    5. Buyer Inspection, Contracts & Sale

    The buyer was then given a period of time to inspect the information. They looked at the payment records, the invoices, the receipts, etc. Then a contract was drawn up and both sides were required to sign the agreement.

    The actual transaction was done through escrow. The buyer posted the funds, they are then verified, and then held for 72 hours in escrow. Once the funds were verified and confirmed to be in escrow I sent over all website files and transferred all the assets to the new buyer. While the funds were being help for 72 hours the buyer is given time to inspect the actual assets. Escrow released the funds after the 72 hour mark.


    6. After Sale Care

    There was a lot of language in the sale terms that was set up to ensure that the new buyer had a successful transition. I was more than happy to agree to this, as I wanted the website to be a continued success in the control of the new owner.

    This is something I highly doubt many website brokers do and it just shows that the guys over at FE International are all about building long term relationships. After the sale they want to make sure both sides are happy, and the terms to help transition the new buyer are something that really helps.



    Most Impressive: The Attention to Detail

    This was the first time I have worked with FE International and I must say that I was very impressed. They didn?t waste any time and they really stepped up when something came up that I wasn?t sure how to handle. It was my first time selling a website so I obviously had questions along the way. There wasn?t a single time that I questioned my decision to sell and list with them. David especially was really helpful, I spent most of the sales process with him so as you can imagine he faced a mountain of questions.

    After the sale I received a nice package from the team, which included a nice bottle of wine with a nice message. It was a personal touch like this that really showed me how professional this company really was. I am confident recommending them to anyone reading this. They will surely be who I list future websites with.

    [​IMG]



    What Contributes to a Successful Sale

    Not every website is going to pass the due diligence and inspection phases. I wanted to put together a quick list of what I believe was responsible for the successful sale of my website. This is also a list of information that I am going to make sure I cover every time I launch a new website, just incase I ever want to sell it in the future.


    1. Detailed Financials & Accounting

    I?m really glad I kept immaculate financial records for this website. A lot of people might have really great online businesses but if they simply don?t have solid records it can prevent a possible sale. Buyers aren?t interested in buying a site that might make the amount of money the owner claims. There needs to be no doubt and the only way a buyer can be certain is by viewing detailed payment records from the merchant and the bank.

    If I can give you one piece of advice, it is to use a payment gateway that keeps everything in one place. I know a lot of people just use PayPal but I prefer a merchant like 2 Check Out. The buyer can pay with any major credit or debit card or PayPal. The backend they have is great and I will continue to use them because of the smooth dealings I?ve had with them in the past.

    I would also suggest that you even use accounting software like Quickbooks to keep all your expenses right there with your sales. This makes creating monthly profit and loss statements a breeze. I feel this whole sales process has actually made me a better businessman. Be as detailed as possible so you can show a potential buyer everything.. trust me, they will want to see it all.


    2. Detailed Customer Records

    This is very important and a point I think a lot of people here can benefit from. Even if you are selling services on a forum you need to treat your customer records the same way a major multi million dollar agency would. Every single customer (past and present) is a valuable asset and they increase the value of the business. Current customers that are currently on the books are worth the most but a list of previous customers also has value.

    How?

    When a new company acquires a company they can reach out to that list of previous customers and introduce themselves as the new owner and offer a special deal to pull them back in. This is a great way to really drive sales in the beginning. A lot of old customers stop a SEO service if they shut down a site or if the competition in that nice becomes too hard. One thing I never did was to reach out to previous customers and offer deals to come back. It?s such as easy way to get new clients and now I see why that old customer data has value. It?s all about being as detailed as possible. Document everything and save all records related to the business.


    3. Systemized Business Model

    The easiest business to sell is one that can continue to operate smoothly when it changes ownership hands. It?s much easier for a new owner to run a business that has systems in place for everything. From attracting customers, to processing orders, to completing the work.. there needs to be a system in place for every working part of the business.

    This is true for any business but especially online ones. A lot of serious buyers are ones that own multiple websites in a variety of niches. They aren?t going to have the specific skill set to operate an online business on their own nor do they want to. They are looking to acquire web assets that make money because of the systems in place.

    I?m currently selling SEO on my own site and I?m in the middle of working with my development team to introduce several additional services people can order. Every one of these has a system behind it, from the order intake to the fulfillment of the order. I?m building it this way so the site can operate fully even if I stepped away. Who knows, if the right offer ever came around I might entertain selling in a few years. So, just incase that day ever comes I?m making sure there is a system in place for everything ;)


    4. Strong Business Relationships with Vendors, Suppliers and Staff

    When you sell an online business you are selling more than just the actual website. A lot of times you are passing on business relationships and contacts with suppliers, vendors and even workers and staff. You have to have a solid relationship with everyone to make the transition smooth.

    Nobody is going to want to pay money to take over a business that is operating with unhappy staff or one that is using the service from a vendor that you have a horrible relationship with. When a potential buyer is performing due diligence there is a good chance that they are going to do reference checks with your vendors. They might not even do this to see what type of relationship you have. They might simply be trying to confirm the monthly cost of a particular service, such as a dedicated server or a backend system. During that conversation the last thing you want the potential buyer to hear is ?Oh yeah?that company (or owner) is a complete prick.? That could kill a deal instantly.


    5. Rock Solid Customer Service

    The SEO service that I sold was one that I launched 2 years ago. Part of the value came from the track record of the service. We always provided top notch SEO but also a high level of customer service as well. We always answered questions right away and if we didn?t feel a particular customer was the right fit we would let them know. It wasn?t just about making money. I was more concerned with creating a SEO service that people trusted and knew wouldn?t let them down.

    If I simply let anyone come on board and ignored simple support questions it would have never grown into what it became. And I?m confident that if the service had a record of poor customer service a sale would have never been possible, even with the sales numbers I had. For someone to invest in the purchase of your website they need to be certain you have a clean record and spotless customer service will help you get there.


    Conclusion

    I wrote this to give you guys an insight into the world of website flipping on the higher end of the price tag, I hope it will enlighten some of you considering going down this route. I want to say thank you to meathead1234 and the entire team over at FE International. If anyone is interested in selling or buying, these are the guys to speak with. You can contact meathead1234 here or visit his website here.

    I hope you enjoyed the read. Any questions or comments drop them below. Until next time.. Ciao for now!
     
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    Last edited by a moderator: Nov 22, 2015
  2. rabbitking

    rabbitking Elite Member

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    Congratulations Tommy! That was a slick method to get a bottle of castellroig.
     
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    Last edited: Nov 20, 2015
  3. amoon

    amoon Jr. VIP Jr. VIP

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    fliping is a good way to bank hard...but it works if you have a good website/ with good mounthly traffic...and ranked well in search engines...

    CONGRATS t00my...time to party now...ENJOY...
     
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  4. MrE

    MrE Executive VIP

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    Was looking forward to this post having not yet been through the process myself, a few good points which were things I was missing which could have hurt a potential sale.

    Was there anything you didn't have or do during the time running your business which hurt your final sales value, or anything you would do differently the next time from the start with the exit sale in mind?
     
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  5. t0mmy

    t0mmy Jr. Executive VIP Jr. VIP

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    There was loads I would have done and will do differently with new ventures. I guess the biggest lesson was automation. With this business a lot of the client onboarding is done manually, a lot of the accounts needed are separate.. like ranking, reports, support etc. Had I added a client management system I could have automated 100% of the manual work load here.. which probably would have added more value.

    This alone was a lesson well learned. I've installed a full client management system on my newest project.. I now have everything in the one place and accessible via a dashboard for clients to manage their payments, rank tracking, support and more. This also records all the billing activity.. If I do decide to flip the new project in the future everything from accounting to client management will be easily transferable, plus it adds a lot more value to the site.
     
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  6. ridersark

    ridersark Regular Member

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    Congrats on having made a successful sale. I hope you don't miss your web property. If you understand what I'm saying. That attachment :(
     
  7. johndavis74

    johndavis74 Jr. VIP Jr. VIP

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    I think sites like flippa have killed what used to be a good industry. I have a site that is making close to $40k a year which is from classified and social media and even with two years of solid earnings no one wants to pay more than a few months revenues because they see sites with 100k visitors a month for $3k on flippa and the owner is claiming they make $5k a month. Then you look at the stats and the visitors stay for less than 15 seconds and their average page views is less than 1 page per visitor.

    So many people have gotten into the site flippa just to scam people and they have killed the market for legit sites. I miss the old days!
     
  8. SkyrocketSEO

    SkyrocketSEO Jr. VIP Jr. VIP Premium Member

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    Yeah, site flipping is dead.....tell me more please
     
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  9. aBoss

    aBoss Regular Member

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    How long did it take overall from beginning to end?

    How much % did they take?

    What are the chances buyer chargeback?

    Can they pay via BTC?
     
  10. t0mmy

    t0mmy Jr. Executive VIP Jr. VIP

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    This is why I used a professional brokerage company with pre-qualified buyers on their lists. There is less room for messing around like that from a buyer or sellers side when a broker is involved. The valuation I got was spot on.

    I think roughly 3 months from the start of the sales process. They take 15% of the sale.. it's automatically paid out to them as the broker by escrow. No there are no charge backs with an escrow payment, the amount of due diligence done before hand leaves no room for error - everyone is on the same page before funds are even deposited in escrow, after that the buyer has 72 hours to inspect all the assets.
     
    Last edited: Nov 20, 2015
  11. switchblade

    switchblade Registered Member

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    Congrats Tommy on your successful sale. These are very important points you have mentioned here. Particularly so since many who run an online business often have very little experience in running an offline business(an offline business environment often makes having these records mandatory).

    Two things i will like further clarification about :

    (a) How did your buyer access and verify your customer list. It is common to maintain a customer list(name, email address, e.t.c.) with an autoresponder company. Were they helpful during the transfer process. Did you have your own personal records of your list/clients or did you export your list from your autoresponder's site?

    Also
    (b) What client management system/software are you using now?

    Thanks and congrats once again.
     
  12. t0mmy

    t0mmy Jr. Executive VIP Jr. VIP

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    Well 2checkout had all the client details as they where subscription based. We kept master records then as well as lists in mailchimp.. this was given to the buyer.

    I found this client management system just recently through a banner here on BHW which lead to their site and yesterday discovered the sales thread, I'm surprised there hasn't been much chat about it yet as it's perfect for service providers. It has everything you would need built in along with api access for rank trackers. Perfect for an SEO providers needs.
     
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  13. BigTroll

    BigTroll Jr. VIP Jr. VIP

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    Congrats, mate :)
    Now give me a cheeseburger :D
     
  14. ChanzGrande

    ChanzGrande Elite Member

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    Not surprised at all to hear you had this level of positive experience with FEI. 100% of my interactions with Thomas were always amazing, and those guys over at FEI really have their act together. They have to easily be the best in the business when it comes to buying/selling websites, and your experience speaks directly to that.

    Thanks for sharing this information and testimonial directly with the community. Hopefully it will help others see that even though this is BHW - many of our members are serious business people building real-world highly valuable companies.
     
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  15. faithjhung

    faithjhung Jr. VIP Jr. VIP

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    Another epic thread. I believe this site is rankusnow? It's okay not to disclose.I'm sure your next venture would be bigger and better. I always loved your support and your honesty when dealing with clients.
     
  16. t0mmy

    t0mmy Jr. Executive VIP Jr. VIP

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    No it wasn't RankUsNow! That's only a year old, I wouldn't be selling a business only a year in. It's still being run by Tony and Roman. I simply pulled out of the team to concentrate on my own projects :)
     
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  17. faithjhung

    faithjhung Jr. VIP Jr. VIP

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    Cool, I hope to be your private client in the near future. I'll just have to make more $$$$ to work with you.
     
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  18. GroundUp

    GroundUp Regular Member

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    I saw Thomas talk at the ungagged london event on this topic and he definitely knows his stuff. I learned a lot about the best way to get a site ready in order to achieve the best price. As you say automation will help increase the price your site commands in the market. In future if I ever sell a site it will be with FEI. Congrats on the sale.
     
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  19. t0mmy

    t0mmy Jr. Executive VIP Jr. VIP

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    Heard great reports about the London event man.. was regretting giving my ticket away here in the end up. I agree Thomas and FEI are definitely in a league of their own.. it's easy to see why they have the rep they do.

    Yeah the automation aspect has been a big lesson for me.. not only does it make my life easier it will add value to projects for any future sales.
     
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    Last edited: Nov 22, 2015
  20. GroundUp

    GroundUp Regular Member

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    Was lookin forward to meeting a fellow norn iron man. Maybe next time .
     
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