When buying a business, a savvy buyer needs to consider some important aspects in order to speed up the process.
The first of them is how you will buy the business. If you have cash, your funds need to be readily available in one or two places, so you can easily provide a proof of funds when asked. Sometimes you can offer part cash and part owner financing, however this is a much less attractive offer.
Should you require finance, you will need to do a good deal of upfront work and ensure eligibility and pre-approval, especially if you are choosing the SBA loan route.
You should also setup an escrow.com account, so the purchase funds will be disbursed according to the transaction terms.
Regardless of your tax bracket, you should also consult with a CPA and make sure that your purchase is made as tax-efficiently as possible. Plan accordingly for the capital gain tax if you want to hold onto your new online asset for over a year. Legal counsel is also a must to draw all paperwork necessary, such as a letter of intent and an asset purchase agreement. Also, understand that finding professionals that understand the specificities of an online asset to perform these tasks for you could take some time, so find them before starting your search for a website for sale.
You also need to find a website for sale, and one of the most efficient ways to do it is by contacting a broker. Your broker will present you websites based on the characteristics you are looking for, and you will be able to speak directly to the seller. It is your chance to ask them all about the ins and outs of the business, since the buyer is the person that better knows and understands the website.
Once you find a suitable website, then it comes time to perform due diligence and validate all the numbers given by the seller. There are many tools and processes to find out everything you need to know about how the website was developed. This is also a great opportunity to understand how honest and straightforward the seller is. If this person is hiding anything, it is your chance to know.
Your financial offer and payment terms should reflect the results of your due diligence. You should also structure your offer in a tax-efficient way, so you can minimize your tax burden.
Your website purchase should definitely include training by the seller, as well as a post-sale transfer window in which the seller is available to provide assistance. Your purchase process could also call for certain payment mechanisms such as holdbacks or earn-outs, and be connected to the maintenance of keyword rankings or other elements you consider important. And before finally releasing the funds from your escrow.com account, sometimes you will have a short inspection period and check the traffic levels, the purchases being made, and so on.
If you plan yourself accordingly, you will realize that most of the work begins much before starting your search for online assets for sale. On the other hand, once you do find a website that suits your criteria, the entire process goes very smoothly. If you are an inexperienced buyer, perhaps you could be nervous about the process. Follow the process laid out in this article and you will certainly find good results.