Buying a large business and sell of pieces of it

Has anyone ever done this? I think I saw it in a movie once

The thinking is that buying in bulk gets you a discounted rate even for business, would it work with a website?

Thanks in advance!

 

Do the math.

 

I think you are talking about breakup value - and it is usually done with a public company where the price is determined by the market value, which changes daily with the price of the stock. You can have a large company with different divisions and certain ones may be very attractive to other companies who are interested in pieces, but don't want anything to do with the entire company. You can also have a situation where a stock price drops so low that its assets are market priced below resale value.

As was suggested, if you have buyers for individual parts of any business and the sum of the parts exceeds the whole, then you might try it. Practically speaking, I don't think this is going to apply to very many websites. Unlike a public company which can't control its stock price, the owners of the website could choose to piece it out themselves if they were interested enough to sell it, and at any price they set.

I think most websites would realize the most value as a sum of their parts, and that by breaking it up, would likely sell for less.

 

You could do it by setting up a holding company which looks after your Brand Name principal company then have a number of separate operating companies that control each stand alone revenue generating cost center

The same principle could be applied to websites but it would take good planning and organization and you need to be generating large revenue streams from each cost center .i.e from each website

 

It depends on how you are selling it. One of the valuable components of a site would be its domain name and if the site in question has only one domain name and the other components of the sites are part and parcel of that site, you probably cannot break them up to sell. Besides if the site uses several scripts, the licenses may allow you to transfer but only if it is associated with the domain name it was registered with.

However, if it is a holding company site which you are purchasing and it comes with multiple smaller websites which they own individual identity, you probably can break them up to individual websites and sell them.

The term is Corporate Raiders http://en.wikipedia.org/wiki/Corporate_raid , people or businesses who buy companies and break them up and sell them as smaller components.

 

On a smaller scale, it's quite feasible to buy a decent sized hosting company and sell off the clients that don't fit with your existing/planned business.

 

Definitely NOT the case that 'buying in bulk' means a larger business is cheaper. The larger business, if otherwise identical, will always attract a better price (multiple) as it will be seen as more stable, feasible etc. Tiny businesses (sole trader is worst example) have little value to purchasers, although hosting clients can be an exception.

 

"I think I saw it in a movie once"

Pretty Woman

 

Related: Asset stripping

 

If you're going to do that, you had better know the industry inside and out. Buying companies and spinning off assets or divisions is really complicated, to say the least.