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Selling your internet business can be overwhelming. Where and when do you start? What type of buyers should you target, and where do you find them? How do you maximize the sale?
If you are at these crossroads, our guide today will help you decide on the best approach.
We'll discuss what you need to consider before the sale, where you can market your business, the mistakes to avoid, and all the crucial steps to follow.
Let's get to it!
You can follow the nine steps below to sell your online business successfully:
We'll discuss each of these steps in greater detail in one of the following sections.
However, if you’re all set to sell your business, you need a competent M&A team to guide you through the process. At Exitwise, we help you create the best M&A team for your needs to sell your business faster and at the best purchase price possible.
Reach out to our team to maximize the sale of your internet business.
Consider these three critical things before selling your online or internet business:
Each reason to sell has its own implications regarding how you conduct the sale and the outcome. You need to have the right motivation.
While there is no general right or wrong reason to sell a business, you'll want to ensure you are selling for the right one in your specific situation.
Some common reasons include:
Whatever the reason, identifying it early can help get you in the right mindset, find the right buyer, and navigate the whole M&A process confidently.
Is it the right time to sell your internet business based on internal and external factors? Is the general market favorable for business sales?
Prevailing internal and external trends can affect the value of your business. If the company is on an upward growth trajectory or demand for such businesses is high, its valuation can be higher.
Having an exit strategy as soon as you start the business can help you define the best time to sell. However, you can begin preparing for an exit one to two years ahead.
Most business owners often forget to visualize life after the sale. Life continues, and how you handle yourself after a business exit can significantly impact your life and business goals.
Have you planned a smooth transition and integration to help the new business owner succeed? Have you considered what to do with the sale proceeds?
Besides, you'll need to plan what you'll do once your business sells. The emotions from selling and letting go can be a rollercoaster. Considering how to handle them and what to do after the exit can help you get in the right mindset.
You have several valuation options once you set up your internet business for sale. Deciding which method to use can be confusing.
Here are common methods you can try:
A valuation multiple is a market-based valuation system where you apply a numerical multiplier to a given financial metric.
Valuation multiples are among the most common methods, especially when valuing e-commerce businesses and websites.
You can use the ‘comparable analysis’ or ‘precedent transactions’ method to determine the multiples or sale prices other similar businesses sell at in your niche.
For example, you can base your valuation on EBITDA, revenue, or seller's discretionary earnings using the following formulas:
If your business has $250,000 in annual SDE and similar businesses typically sell at a 2.5x SDE multiple, its valuation would be:
Business Value = 2.5 x $250,000 = $625,000
Our free business valuation calculator can help you estimate the real-time value of your online business based on its revenue or EBITDA.
You can use the discounted cash flow (DCF) method in an internet business sale where you've grown past the startup phase, built a formidable brand, and have a large team.
Here's the DCF formula:
Total DCF = CF₁ ÷ (1 + r)¹ + CF₂ ÷ (1 + r)² + … + CFₙ ÷ (1 + r)ⁿ
Where;
However, the main issue with using this method is that online businesses are typically seasonal. Your annual cash flows may fluctuate too much between months and years to give a highly accurate representation of value.
In this method, you calculate how much a buyer would need to build a business like yours from the ground up.
This method is ideal for evaluating an online business for sale that is in the startup phase and doesn't have predictable cash flows.
Determining the value of your internet business can be overwhelming, from choosing the proper valuation method to applying it and factoring in industry factors and qualitative aspects.
To assist you with the process, we can help you find reliable M&A experts. They can also help you with the sale so you can sell faster and at the best price possible.
Get in touch with our team at Exitwise to maximize your business valuation and exit.
Here’s a deeper look at the steps to follow for a successful internet-based business sale:
Developing the right mindset for the business sale and exit is about preparing yourself.
You'll want to be psychologically ready to let go of your business and have proper reasons for selling.
A closer assessment of your business and personal goals can help you develop a good outlook.
Once you are personally ready, it's time to prepare your business. Start by preparing your financial statements for the last 3-5 years.
You should be ready with complete income statements, profit and loss statements, tax records, balance sheets, and more.
As mentioned above, there are various ways to calculate the value of your business.
The efficacy of each method can differ depending on the nature of your business. You can use different methods to act as checkpoints for each other to ensure a more accurate valuation.
While you can successfully sell your business independently, working with M&A advisors and business valuation service experts can help you sell sooner at a higher price and more favorable terms.
At Exitwise, we have a proven three-stage process for helping you find and work with the best M&A experts in your industry. We'll connect you with M&A attorneys, wealth advisors, finance accountants, and investment bankers to help you with the sale.
Chat with us now to learn more about maximizing your exit plan with Exitwise!
A low sellability score can mean your business is hard to sell as it is less attractive to potential buyers.
Evaluating your business’s sellability can show you where you can improve to maximize its value, making it more attractive and likely to sell at a higher price.
If you are selling your business independently, you can research and reach out to potential buyers. You can consider competitors and financial buyers looking for internet businesses for sale.
However, selling alone can significantly limit your buyer pool.
But, when you work with M&A experts, they can help you market your business to their pre-vetted and pre-qualified pool of buyers.
They can also contact them on your behalf, following the due sell-side M&A process that includes documentation and due diligence to protect your best interests.
Your M&A team can also negotiate better terms of sale on your behalf. These can include the deal structure, terms and conditions, reps and warranties, and even the sale price.
Once you've agreed with your buyer, conclude the sale with a detailed M&A sale agreement, accept payment, and transfer the business to the new owner.
The whole process of concluding the sale and transfer can take a while. You can execute it in stages as per your agreement to protect both parties.
For example, the buyer can place the payment in escrow to be released as soon as you complete certain steps in the transfer.
A successful business sale goes beyond the final transaction.
You'll want to help the new owner settle into the business to increase their chances of running it successfully and maintaining the legacy you've built over the years.
You can help the new owner familiarize with the employees, key customers, suppliers, and the business’s operations.
A smooth transition and integration can increase your M&A success rate. Other businesses you work with in the future will want to look at your M&A success history to determine if you are an ideal buyer or seller.
There are tons of platforms where you can list your business for sale as an owner or under an M&A team.
Let's go over a few strategic ones:
Here are common mistakes to avoid when selling your business on the internet:
As mentioned, working with M&A experts can help you streamline the sale process. They can help you prepare yourself and the business for the sale, market it to the right buyers, and negotiate the best terms on your behalf.
When you work with us at Exitwise, you can connect with the best M&A attorneys, tax accountants, wealth advisors, and investment bankers to help you smoothen the sale.
Schedule a consultation with us today to learn more about our proven three-step process for hiring and working with your dream team of M&A experts.
Let's close today's discussion with questions people usually ask about selling an internet business:
The time it takes to sell an Internet business varies widely based on your preparedness, the type of business, prevailing industry trends, and the general economic outlook.
You can sell your business in weeks, months, or even years.
The best times to sell your online business include:
Qualifying a buyer is a multi-step process that involves assessing their strategic alignment with your business goals, track record of M&A success, relevant industry experience or expertise, and financial capabilities.
You can do these assessments through detailed questions, one-on-one meetings, and due diligence.
Selling your internet business is easy once you know what to consider, where to market it, and who to work with to help you with the sale.
Our Exitwise team is always available to help you streamline the sale process by helping you hire and work with the best M&A experts in your niche.
Consult with our team today to get started!
Let Exitwise introduce, hire and manage the best, industry specialized, investment bankers, M&A attorneys, tax accountants and other M&A advisors to help you maximize the sale of your business.
