8 Most Important Qualities to look for while selecting Internet Business Broker

Selling an internet business is a complex process and most internet business owners have never sold internet business before.  If you are internet business owner and considering using services of a business broker, you must read following to understand what are the important factors in considering to use services of a business broker.

1. Does the broker have experience selling internet businesses: Make sure the business broker you select to sell your internet business has experience or knowledge with selling internet businesses. Most of the buyers who are looking for internet businesses are not interested in regular brick and mortar and retail store front type of business. If you decide to work with a broker who sells all kinds of businesses, you may miss on a big advantage internet business broker can provide you with their existing buyer pool. In addition, ask about the sites they have sold and ask for seller references. Don’t just stop here, pick up the phone and talk to them, ask how broker managed process of selling his internet business . If you were not happy with your broker you will not give him a good review.

We have been selling internet businesses since 2003. We have large pool of buyers who have come to rely on us for quality of our listings, honesty and preparedness. Most of the businesses we sell are sold to one of our existing buyers from our buyer database.

2. Convey your expectations: Make sure you discuss and convey your expectations to the intermediary you select. Direct and open communications about expectations and other issues with your business broker is critical in selling your internet business.

Every business owner has a story that needs to be understood fully before business can be completely evaluated. For many business owners primary motivation for selling business is seldom money but a desire in change in life style. We take the time to understand your motivation behind your desire to sell your business and ensure your expectations are met.

3. Devil is in the details: Is your broker asking the right questions? Has he determined the adjusted net income and valuation of your business and provided you with his recommendation on asking price prior to asking you to sign a listing agreement? Ask him about a cash price vs. a price with terms involved. 70% of all small businesses put on the market never sell and the number one reason is that the price is usually too high and the deal structure is unrealistic for potential business buyers. You want to work with an honest business broker who is not afraid of loosing your business by telling you what he thinks is the realistic asking price for your internet business.

Ask for samples from us of completed Executive Summaries of businesses we have sold. Every detail of your business will be analyzed to find relevance in preparing your business for sale when you work with us. At the end of our detailed business appraisal process, we will provide you with a time table of goal and expectations that we will use as a blue print in the process of selling your business.

4. Confidentiality: Internet consumers are savvy internet users and you don’t want your customer to know you are selling your web business. you need to know how the broker is going to keep the sale of your internet business confidential in nature. Ask your broker to see a copy of a Non-Disclosure Agreement they are using and ensure you are comfortable that it sufficiently protects you as a seller.

We do not disclose any confidential information prior to receiving signed NDA.

5. Preparedness: Make sure the internet business broker you select to sell your business has prepared your business for marketplace – are all the financials and tax returns on file and ready for possible due-diligence. Do you have all documents ready for review like business history document, shopping cart data, monthly sales comparison year to year and contracts with vendors, etc? If the business broker doesn’t have all your material ready to go for a possible review by business buyers, the interested party may walk – be ready to go upfront with all your material for the sales process.

We are told by our buyers that many sellers follow a strategy of Fire ( List the business) , Aim ( Advertise and create maximum exposure, attract buyers, obtain offer ) , Ready ( Prepare for a closing ) instead of Ready ( Determine optimum value, develop a profile of the ideal buyer and transaction structure, ratify timeliness of selling ) , Aim ( Prepare company for sale and develop a marketing plan designed to attract ideal candidate, assemble due diligence materials )  and fire (Begin selling activities maintaining utmost confidentiality, attract appropriate buyer, negotiate contract terms, co-ordinate closing activities). By following Ready, Aim and Fire strategy, we are able to sell your business with Best price and in shortest amount of time.

6. Responsiveness: Make sure the broker you choose is good about getting back promptly to potential buyers. This goes back to volume v/s quality. If you don’t ask for references and speak to the references provided by the broker, you will not know how to differentiate between good broker and an average broker.

Many buyers have told us how delighted they are with our responsiveness. Business for sale Market is saturated with buyers and there are lot more buyers than sellers. It is very important to get back to buyers in timely fashion and we always make sure we get back to buyers in timely fashion.

7. Communication: Constant communication with your broker is important.  Ask your broker to keep you in loop of buyer inquiries, response rate and buyer feedback. Find out if  your broker has gathered any data for the businesses that he has sold so he can update you once your business is listed with his historic response for the businesses that were sold. Businesses that sell have active broker-owner co-operation and harmony.  Good broker will insist on frequent communication with seller. Remember, broker needs your continuous help during the business selling process and you should be prepared to spend time to understand the issues that are being brought up by potential buyers.

We have developed a solid model from years of selling internet businesses that gives us a pretty good idea of what rate of response should a listing get it were to sell and we use this information to guide seller to recommend changes and adjustment in terms of business offering.

8. How Long Does it take to Sell Internet business: Businesses on average typically take six months to eighteen months sell. If your broker does his job correctly your internet business should sell within two to six months. Make sure your broker has a game plan to make this happen!

Our typical listing is sold in first 6 month of list date with a very high satisfaction rate from sellers. If you are in the market for selling your internet business or even considering to sell your internet business and wants to learn more about selling process, you must read this Appraisal Primer !

Good Internet businesses are sold quickly – If you see what you like, grab it – or someone else will

I recently finished my assignment with a buyer; let’s call him Mike, who contacted me after losing a good internet business that he liked to another buyer. He said this business was selling products online that he and his wife liked and it had all characteristics of a good web business. He was upset when he learned that business was sold at full asking price but the seller agreed to purchaser’s offer to finance the inventory that seller was originally asking to receive as cash. When I asked Mike why he was upset he said he was willing to pay the full price if seller would finance the inventory but he was simply late in putting his offer forward. I have experienced buyer reluctance to extending an offer of what buyer considers a fair offer price numerous times and hence the topic of my blog today.

The assumption that the seller will be offended and refuse to deal further–that was the erroneous idea in Mike’s mind–is just one of the reasons that the majority of prospective buyers of internet businesses never get around to making offers on businesses, even websites that interest them and meet their criteria.

In fact, SBA indicates that 80% of people who say they want to buy a business never actually complete a deal. Most of those don’t even “pull the trigger” on a business they’ve been investigating.

And the fact that sellers and their brokers spend most of their time with people who are not serious, provide an answer for one of the biggest complaint of this industry that sellers are in no hurry to supply information requested by buyer prospects.

How to get Sellers Attention?

If a business interests you, if you can see yourself as the owner of the internet company you’ve been looking at, the next step is to submit a Letter Of Intent (LOI).

Buyers who sign an LOI and show preparedness to write a deposit check set themselves apart, immediately, as “real” buyers. By stating your intent to buy a company according to certain offer price, even if your offer doesn’t match those requested by the seller, you grab seller’s attention above the crowd.

Submitting an LOI shows you are serious. And it means you’ll be taken seriously in the marketplace of Internet businesses for Sale.

Details on how to actually do it

Reviewing the details of a business for sale listing is helpful, as it informs buyer prospects about what the seller has stated regarding what he or she wants in a deal. But that’s all. Is the seller more interested in total selling price or cash up front? Is there flexibility regarding seller financing? A buyer prospect can speculate about these matters but a good thing to do is to begin discussing it with the business broker. But even a better way to begin discussing this is first to request a meeting with seller. Lots of buyers we work with are reluctant to speak with sellers fearing they will be obligated to put an offer. Meeting with Seller can be just to discuss various aspects of business that is not covered in prospectus and to address the concerns buyers may have. Once this meeting is completed, Seller will be lot more open and interested in learning about what you think of his business and perspective on your offer if it is significantly different than what they are asking.

It may take some courage to actually sign on the dotted line and hand over a deposit check. But it’s not as bad as it sounds. Deposit paid with an offer is usually fully refundable. You simply have to check with the broker who is representing a seller before signing and handing over a check.

Let me complete Mike’s story:

Since I started working with Mike, we made 3 more offers to different businesses. Although we could not reach an agreement with seller on first two businesses, each time Mike’s comfort level increased in dealing with sellers and his understanding of their perspective gotten better. Finally just last month, Mike’s offer was countered by seller with minor changes and they came to an agreement that will be closing next month.

Hello world!

This Blog contains observations, tips, news, events, and case studies relating to selling or buying an internet business. This Blog is ideal for internet business owners and people and companies who are interested in buying or starting an internet business.