The Interactive Insiders' Guide to Selling Your Web Business

[Matthew Wood]

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To kick start the new a4uexpo forum, I'm excited to bring you the 'The Interactive Insiders' Guide to Selling Your Web Business'

The session will be highly interactive and take its cues from Duncan and Sean’s experience, from their own dialogue leading up to the session (they’ve been in touch since July and have already started meeting) and from your chat and dialogue on this forum.

As far as we know this is the first time there has been a session of this nature in the affiliate industry in the UK.

We invite you to make it as relevant and worthwhile a session as possible.

We hope that people thinking about possibly selling their business (in whole or in part) will come, as well as some who may be looking to buy a business. But also some people who have experiences of their own that they’re willing to share: selling or buying.

Duncan and Sean will be here shortly to get the discussions moving, however I thought I would give you a brief introduction to their backgrounds.

Duncan Jennings

Duncan started his first internet business, Net2, at the age of 16 and went on to sell this successful domain registration and hosting company by the time he was 21. Realising his passion lay more in acquiring customers than servicing them, he focussed on the affiliate space, founding eConversions, a paid on performance search marketing company which last year generated over £75 million in sales for its clients.

With Travel Library, Duncan again leveraged his search marketing experience to help rapidly grow the site. The strategy works and the site was acquired by TripAdvisor an operating company of Expedia, Inc.
in September 2006.

Drawing on these experiences Duncan now provides angel funding for web start-ups through his eMomentum vehicle and recently launched a new social local business directory welovelocal.com.

Sean Lafleur

After working nine years for Bertelsmann in traditional direct marketing business management, Sean Lafleur took the plunge into the Internet in 1999 as Vice President Internet for the international classified ad group, Trader Classified Media. His work there, subsequently as Chairman and CEO of MakeMusic!, and most recently as founder of Flower, and non-executive director of buy.at, has seen him play a leading role in a 390M€ IPO, in a reverse merger, in four venture/private financings, and a leading or advisory role in more than a half-dozen M&A transactions, mostly on the buying side involving Internet and software businesses. And all of that in times of boom, bust and re-boom.

[duncanjennings2]

Hi Everyone,

Thanks for that Matt. Both myself and Sean are really keen to get input from everyone on what they'd like to hear about in the session.

I know from painful experience that it's incredibly easy to make costly errors during the heat and excitement of a deal so this is a great opportunity to learn from our mistakes and successes! Affiliates are great entrepreneurs and I'm sure there are plenty of people on the forum with great businesses who've had offers or are considering a sale.

Our session will help give you the inside track on everything from how to value your business to finding a buyer and dealing with all the legal and due diligence that comes with a sale.

So.. don't be shy... post up anything you'd like us to focus on. This could be a specific question or an area of interest. We want to make the session as relevant and useful as possible.

Look forward to see you at the Expo and helping you become the next YouTube ££££.

Duncan.

[seanlafleur]

Hello everyone!

Matt, thanks for the kick-off.

I know that, sitting in Paris the day before the big match, I take something of a risk in posting among the first on this topic (Duncan just beat me to the post) but wanted to throw in a hello anyway!

So, with trust that cross-channel relations will return to normal by the time of the Expo (no matter what the outcome tomorrow) and that Duncan and I will still be on talking terms, here I go.

I've been on the buying side of the table most of the time and have seen some pretty terrific and some terrible deals happen for both sides (with corporates and smaller companies) and I've also lived through the consequences of deals, integrating the purchased web business into another one on several occasions.

Duncan and I are having fun so far in comparing our notes and experiences, but we really want to speak to the areas of interest of those who want to be there. In fact, we even said to Matt, ok we'd like to do this, but can we give it a try to engage people leading up to the event? Et voilà (ok, enough French)!

So what matters most to people? How can this session help you (or do you want to help us by sharing a story of your own?)

I'm pleased we have this thread going to guide us...

Looking forward to chiming in again later...

Sean

[dougs]

Cheers boys...keen to listen

Serious well done and a great idea.

Doug
Ps. Dunc can you lend me a few quid mate?

[seanlafleur]

Thanks for the cheer, Doug.
Any bit you're most curious about (apart from tapping into Duncan's check book: will let him field that one )?
Sean

[Keith]

Looks an interesting session, good luck with it guys

[dougs]

Curious what you look for if buying.

We have had a few offers, but we have never taken them serious as never feel they get what we do....wondering how to better explain it....if we ever did sell.

Ask Dunc what we do

Doug

[Azam.net]

This certainly looks forward to being an interesting session; the speakers are of the highest calibre and have certainly been there, done that and got the t-shirt.

I know a couple of UK networks have been keen to sell for a while and not had much luck, so maybe their management teams will find the session useful

[seanlafleur]

Doug, very good question that one: what do buyers look for?
I heard one phrase from a banker this week that sums up a lot: unique assets.
Things of value that you can't find easily elsewhere.
We'll definitely chat about this one at the session; some things will be regarded as an asset to pretty much all buyers (steady, predictable cash flows, customers, intellectual property, brands...) and some things will mean more to some than others (kinds of customers, skills, etc).
Thanks for your input.
Sean

[seanlafleur]

And on that other part, Doug, about how to better explain what you do and help people find the assets in it that are relevant to them...
we'll definitely be having a focus on that. Duncan and I are were thinking of calling it "Creating a market" for the web business.
One thought is to start with identifying to whom your business, and/or your assets (they're different after all) could mean the most and so would be most likely to pay for them -- and hopefully at a premium.

Sean

[dougs]

The major issue we always have and I wonder how Dunc got over this is:

People want me as they see me as being the person with the vision to take things forward........I have no interest in working for anyone/moving house/having to carry out a business plan.....So the issue is they want me with my flexibility and ability to adapt quickly, but they dont want my flexibility and ability to adapt.....if you get what I mean

Doug

[duncanjennings2]

Hey Doug,

Thanks for getting involved!

I completely understand what you mean, and I think a lot of people are in the same boat. Many buyers look at a business and see that the vast majority of the IP (Intellectual Property) isn't in the web site / domains / traffic, it's in the master mind behind it. This often makes sense because market conditions change very quickly. A practical example would be SEO listings going or PPC becoming unprofitable once you leave. Now these types of risks always exist but if you've got the mastermind involved still you can be sure they'll find a way to adapt as they have done in the past.

So.. how do you get a clean exit with no earn out? Attend the session to find out :-)

Seriously though, as Sean said we are planning a session called "Creating the Market" which I think you'll like. For me a big part of this is getting your story straight for any buyer. It's what you do, how you got to where you are, what makes it special and worth a crazy multiple, why you're selling and in your case why you don't need the founder involved for it to be a success. Sean will be able to provide some great insight on what kind of "Stories" buyers are looking for.

I think there is a lot to be said for selling before all potential has been realised. This may seem stupid, as if you realise all the business potential, you should in theory have higher revenue and profits leading to a greater sale value. The problem is, it can be really difficult to predict when this point happens, which means that you can instead end up hitting a peak and then starting to fall. This is a big NO NO. Realising all potential can also be really hard work, doing the fast, quick wins can be more fun.

If you sell on the up, without squeezing every last drop of revenue out, you can also point out to a buyer all the things you haven't done which they can do to make the business better. If you assume you are selling to a larger company this can also help your case in terms of a clean exit i.e. the reason I haven't done these things is I'm too small / underfunded / lack operational resource / stupid to realise all this great potential - but you can do it and what's more you don't need little old me to do it with you.

See you at the session and thanks again for the input.

Duncan

[renegade]

I'm enjoying the discussion already and I'm particularly interested in avoiding pitfalls when buying a business - I've bought a few websites previously and had mixed experiences but I am keen to keep my business moving forwards so looking forward to the session.

[Luca Brasi]

Great topic.

Having gone through this myself I thought I'd share a few of my experiences of selling a pure affiliate business.

Luckily a lot of guys helped me while the deal was on the table (Dunc, Shane, Malc etc) which made it a bit easier

It's half time in the rugby at the mo so I'll get something together tomorrow.

Id be really interested to hear other peoples experiences too as I'm sure all the info gained will help if you have a mind to sell up in the future.

[dougs]

Interesting selling before you do everything......issue I have Dunc here is after 5 years building some sites, I still see so many more opportunities and not less

This means the buyer has to be cleverer than the normal VC and from my experience of dealing with the very large players in our space, they find it hugely difficult to even grasp a part of what I ma talking to them about.

Also maybe I am just enjoying myself playing with these people and hence not keen to flog anything unless the offer is silly. I am sure this is something many people here feel....I no longer do this just for the cash but for the power

Doug