EP30: What to Expect When Selling a Business to Domain Magnate – Domain Magnate

EP30: What to Expect When Selling a Business to Domain Magnate

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In the 30th episode of The Domain Magnate Show, Michael goes over the questions our sellers have when it comes to buying their website. He explains the importance of transparency in the negotiation and why we ask the questions that we do in order to provide fair offers and deals.

GUEST BIO:

Michael Bereslavsky is the founder and CEO of Domain Magnate. He’s been involved in various internet-based businesses since 2004 and quickly graduated from building, promoting, and monetizing websites to buying and selling them. With over a decade of experience, Michael and Domain Magnate has managed 300+ successful deals.

SKIP TO THE GOOD PARTS:

  • 1:02 – 2:08 Michael shares about his background and what the company does
  • 2:09 – 5:50 How Domain Magnate evaluates a business
  • 5:49 – 8:53   How to check your website’s potential
  • 8:54 – 9:27 Taking a closer look at your business
  • 9:28 – 10:49 Signing deals and how to contact us

SHOW TRANSCRIPT:

Michael Bereslavsky  0:15 Hello, dear listeners and guess Welcome to this episode of The Domain Magnate Show. This video is mostly intended for those who are considering to sell their business to us. So I’m going to explain who we are, what we do, why you should consider selling your business to us and how the process works and also what type of businesses we buy, and the different stages of the process, everything you need to know. So domain magnate LLC is a micro private equity firm. My name is Michael Bereslavsky. I am the founder and CEO of Domain Magnate. Now I’m also a co-owner of m&a advisory firm, Dealflow Brokerage. So in Domain Magnate we buy businesses under $1 million. We buy them on behalf of our investors and our funds.

1:16 So that’s in short who we are.

1:19 As for why you should consider selling to us, we buy directly, we are quick and transparent. So if you compare that to the traditional process of selling for a broker, you don’t have to deal with multiple buyers, you don’t have to explain everyone how your business works, you just share some details with us, then our experienced team will give you it give you an offer and collect the deal quickly if it passes on inspection. Most of the deals we do currently are from people that come to us generally from direct referrals or people that go to domainmagnate.com/sell.

2:05 And just looking to sell their businesses quickly.

2:09 So one big misconceptions is about how to value a business. And for us, it’s pretty straightforward. The main thing we’re looking for is revenue and traffic. And very transparent about that because we buy businesses for growth, we buy them to make profits for our investors. So we are limited to some degree in to what minimum and maximum traffic and revenue we are looking for and what kind of prices we can pay based on that. However, besides traffic and revenue, we’re also lots and lots of different criteria. First of all, there is a criteria for general for what we are looking for. Currently, we’re looking for businesses that have a value six figures from about $100,000 up to 1 million and have primarily organic traffic, monetize these affiliate programs or ads, or perhaps selling some Software or Services.

3:18 We are also looking at, we also have some limitations. In terms of traffic, for example, we don’t go for businesses that are in very competitive industries. We don’t usually go for businesses that have a large seasonal component, we and we currently only buy businesses that are in English language. And when we evaluate a business, first, of course, we look at the revenue and the traffic, the trends and how the numbers, of course and the price. And we often ask the seller to provide their price. And the main reason is just due to see that the sellers expectation is similar to what we would potentially offer for it. So many people are usually usually don’t feel comfortable sharing their price right away because they think that will put them at a disadvantage in future negotiation. But that’s not completely accurate. Because the main reason we ask is just to see that your price fits within our expectations. So for example, if you have a business that is earning, let’s say, just $3,000 per month, and your expectation is to get about a million dollars for it. We will just be able to tell you right away that this is way out of our potential range for Acquisition for potential multiple for acquisition. So that would just save everyone a lot of time to see and be on the same path on the same.

5:05 Same page here. So when we ask your price or expected price range, we just want to see that that fits with our expectations. After we look at the numbers, we also look at opportunities and risks. And in terms of opportunities, generally just looking at how much it can grow from from Google rankings. And there is a big misconception here. Because if you ask a business owner and a business owner, of course, let’s say that their business has unlimited potential.

5:42 And that’s not true because

5:46 nothing has unlimited potential in reality.

5:49 And the easy way to check it is if you look at your, at your main keywords, your main traffic sources, you would see who are your top competitors. And for example, if your top competitor would be Web MD, or like health lines, so after those billion dollar public corporations, then it’s gonna be very, very difficult to compete with them in Google rankings. While if you look at your rankings, and you see that your top competitors for your main keywords are generally similar smaller affiliate sites like yours with a similar amount of backlinks and content, then that means there is some potential for growth. So that’s a simple way how we look at it. We also evaluate the industry, the trends, and basically everything else that there is to know and opportunities for other monetization as well. And then we look at risks. That’s usually the main area where we focus our due diligence. And it comes to really a lot of factors. It could be age, how old has your business? How long has it been active, operational? How long has it been earning consistently? What’s the current trend, but also look at all the graphs, we did look at all the rankings, the backlink profile, we’ll check the competitors, the content quality, we’ll evaluate different potential SEO penalty links, penalty risks, legal risks, seasonal risks and niche industry trends, risks with monetization? So there is a lot and a lot of factors that we look at. That’s also why it’s really difficult for us to answer when people ask us, okay, what, what’s the revenue multiple that you pay? Or how much can you pay for my business, without really giving us a lot of information, we are also quite limited in what we can pay by the criteria that our investors have. So often, it would depend what would fund what investor we are going to buy the business for. And then they all have specific criteria that could be in terms of profit multiple, it could be in terms of risks or opportunities. So that’s why I really encourage you as a seller to be more transparent as well and just be able to disclose to us right away, what is your expected price range? And that would say everyone time to see if it’s possible or not to make a deal right in the early stages. And so, so, how the process works. 

8:54 After the initial approach, we would usually view some details and take a closer look at your business, we would ask for your p&l report, vary some profit and loss. And you will generally ask for access to Google Analytics and Google Search Console and ask you a few more questions about how business operates. So that we can do our due diligence and then our SEO team will take a closer look how due diligence experts will do quite a bit of research. 

9:28 Initially, our main purpose is just to see if it fits with our specific criteria. And then we would generally present you an offer. And if we have an agreement, we would sign a contract. We have a sales agreement that we do for every deal. And we generally conduct most deals to escrow.com if you’ve never used escrow.com it’s the biggest online escrow service they and You can also lookup our episode where we discussed with Matt Barrie the owner of escrow and freelancer.com. So that can give you some more details. So one of the previous episodes in the podcast there it’s a standard escrow transaction that the money is held in escrow. And what’s come from you transfers everything we review, inspect, confirm their website, the domains and then you receive the money and that’s it. So if you have any questions, feel free to contact me directly at [email protected] or our deal manager Colin at [email protected] for more details. 

10:47 Thank you and looking forward to make a deal with you.

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