Preparing To Sell An Online Business

I'm preparing to offer my online business for sale and I've never sold a business before. But one of my competitors has shown an interest in buying us out recently. So I'm looking to gather up important information for potential buyers like our gross/net profits, list of customers, assets such as domain names we own, hardware we own, etc, etc.

(Anything else I'd need to get together to make sure I have everything in order to make my business look more attractable?)

So I have a few questions. Is there any way to get a quick estimated value of my company, before I try to do a more detailed on? How do most people calculate the value of a business, e.g. net profits x 12 months? gross x 10 months? I've it done seen a few different ways on sites such as this before.

Also, I'm not particularly the best negotiator either, so what would you guys suggest? Should I hire an outside individual to assist with putting the deal together? Should I hire a lawyer to handle this? I'm looking for some serious advice on how this should be handled properly.

Are there any books or articles about selling an online business that any can point me to that might help me out?

If anyone has any advice/suggestions for me I'd love to hear them as well. I'm sure more than a few people here have been in this situation before!

Thanks!

 

If you are talking in the xx,xxx or greater, I would get expert advice and a good lawyer who knows about selling businesses.

Depending on the site and business, yes, a 10x monthly gross is a good indicator of selling price.

Doing it right, getting all the information together before selling.
Again, if like the first line, a good profit/loss statement, etc would be great for a potential buyer.

And if you get a lawyer, am sure he will pursue the matter of getting a good escrow company to protect you and the seller.
If not, bring that up as soon as possible.

 

Yes it is in the $xx,xxx range for sure, so I am going taking it very seriously. I think it's worth more than gross x 10 months for sure, since it has been in operation for over about 22 months now and growing steadily, I just need to get everything together and try to prove that I guess

 

I'd think twice about that low valuation.

I know something about business valuations, and can say that it has much to do with the expectations of future earnings, and the riskiness of the earnings projected out into the future. If a site is basically adsense, some links, etc, I don't think that you could value the future earnings past 2 or 3 years. If it were based on something very substantial, you might project earnings out 10 years even. Also, the growth rate has to be predicted and factored in.

Discount the estimated future months earnings at some appropriate discount rate to factor in risk in the future (10~15%/12), and come up with a present value. This process is a little involved, but is necessary to get a fair and good price. Check out a finance textbook.

Good luck!