This post is written by the website broker team from DigitalExits.com . Reach out to them if you want a value on your developed domains.
So you bought a killer category domain name and decided to develop it into a business. You’ve put in the hard work to get it developed, drive traffic to it and convert sales. It’s making a tidy income for you and is relatively hands off. Did you know that site now has tremendous value to an investor looking to acquire an Internet business?
Now there are plenty of resources about getting the top price for undeveloped domains like this resource, this resource and this resource. However if you Google “selling developed domains” there is 0 information on the topic. This article is trying to fill that void.
Now you might be familiar with marketplaces like Flippa.com that help you sell websites. This is a good starting point for smaller websites and domains. The other places you should consider are brokers, forums, large media companies and your personal network. In this article we are going to discuss using a website broker to sell your developed domains.
What is a website broker?
If you haven’t heard the terminology before a website broker helps online entrepreneurs find a buyer when they want to sell their business. Essentially they are business brokers for Digital businesses.
In that process there are a number of tasks performed to try and maximize price:
- Give a valuation
- Compile an information memorandum
- Market the website
- Present the website to potential buyers
- Assist in negotiation
- Manage escrow process
- Provide after-sales support.
What is the process of selling a developed domain?
The following steps are the generally process you would go through when selling your developed domains:
- Get a valuation
- Agree on a listing price
- Develop the selling document
- Market your business to buyers
- Answer initial buyer questions
- Take offers
- Accept an initial offer
- Engage in Due Diligence from that buyer
- Confirm the final offer
- Develop a business sales agreement
- Manage funds transfer through escrow
- Start buyer training
- Finish buyer training
This whole process can take anywhere from 4 weeks to 24 weeks to finalize the process.
Why would you hire one?
The main reasons you would hire a website broker are, we also wrote another article here that goes into some depth as well:
- Access to their buyer network
- They do all the work
- This is what they specialize in
- Help determining a realistic valuation
- Help preparing the business for sale
How much do they cost?
The standard brokerage fee is 10%. Some brokers will charge more for smaller business. The larger the business, generally the lower the brokerage fee. For example a $100 million dollar business the commission might be 2%. There is a really good article here about what M&A advisers charge for a business.
So What Is Your Developed Domain Worth?
Traditional business valuations use a discounted cash flow methodology in most cases to value a traditional business. I have a lot of experience doing these types of valuations with these business valuers from Australia, which happens to be the family business. Now the accepted valuation methodology that is used for Internet businesses is a multiple of earnings. What this means is people will pay a multiple of earnings of the net profit of a business. Let’s take an AdSense site that makes $100,000 per year in income. Depending on some variables people are going to pay between 1.5 and 3 times the earnings of that site giving it a valuation of between $150,00 and $300,000. The factors that determine how high or low that multiple is are age, traffic, growth, business model, niche and business systems.