Buying a website

[Dave]

Hi all,

First post...

I'm looking to buy a website from the likes of Empire Flippers but as this would be my first acquisition I'd appreciate a second opinion and advice. Are there any firms out there that specialise in the legal/financial side of buying ecommerce/content sites?

 

[fisicx]

How much are they asking for the site?

Have you seen the income figures for the site?

 

[webhostuk]

I think Flippa sells such revenue making sites/portals. I am not quit sure if they offer the service you need,but you can check with them.

 

[Dave]

Thanks for the replies.

Webhostuk,
Flippa is largely a marketplace and emphasise they are not brokers. This is partly due to my question as I feel a little more advice from an expert would be useful.

fisicx,
There are a couple I'm looking at. One has a larger asking price and a 40x profit multiple but appears to be growing and has decent traffic figures. It's fairly well established and would be more difficult to grow. It's Empire flippers who appear to be more of a broker.

The other is cheaper and has a lot of room for improvement and is on a 20x multiple. This one is on Flippa so I'm more concerned regarding scams etc. Hence the original question.

I've requested proof of income from both as well as GA access.

My main concern is with the transfer and the legal documentation side of it. Ultimately I'd prefer an experienced professional to hand hold me through the process.

 

[NickGrogan]

40x annual profit or monthly profit?

If it appears to be growing, why would it be difficult to grow?

 

[antropy]

40x profit

Yikes!

3x to 5x profit sounds reasonable, anything more would require some serious growth potential in my opinion.

Paul.

 

[Paul Kelly ICHYB]

40x profit multiple

Why would anyone sell this cash machine?

 

[antropy]

Why would anyone sell this cash machine?

What makes you think it's a cash machine?

Paul.

 

[Paul Kelly ICHYB]

Why else would you want to buy it at such an inflated price?

 

[antropy]

Why else would you want to buy it at such an inflated price?

But it can't be a cash machine if the cash it makes is 1/40th the sale price ...

Paul.

 

[Dave]

It's monthly multiple.

When it would be difficult to grow, I mean additional growth.

 

[antropy]

It's monthly multiple.

who talks about monthly profit in this context?

So it's about 3.3x annual profit? That's generally considered a good price to pay.

Paul.

 

[Dave]

who talks about monthly profit in this context?

So it's about 3.3x annual profit? That's generally considered a good price to pay.

Paul.

A lot of the website marketplaces seem to show monthly multiples (Empire Flippers, Motion Invest etc). I suppose it makes valuing new businesses easier as some sites have only been operational for a few months.

 

[japancool]

I sure wouldn't buy a site that's only been operational for a few months. That's unproven.

 

[NickGrogan]

If I ran a telesales team for 6 months would someone pay me 40x the peak monthly revenue?

Do it twice and I could retire.

So why value a website so highly? People see a website and go nuts.

In reality a telesales team is a lot more scaleable than 99% of websites.

 

[fisicx]

My main concern is with the transfer and the legal documentation side of it. Ultimately I'd prefer an experienced professional to hand hold me through the process.

It's usually done via escrow.

You pay the money into an escrow account. They transfer ownership to you. You confirm everything is as described and the money is released.

I've done this recently and it all went very smoothly.

But I do wonder why they are selling if it's so profitable. What type of site is it? Can you post the domain name?

 

[Dave]

It's usually done via escrow.

You pay the money into an escrow account. They transfer ownership to you. You confirm everything is as described and the money is released.

I've done this recently and it all went very smoothly.

But I do wonder why they are selling if it's so profitable. What type of site is it? Can you post the domain name?

I'd rather not just in case you buy it lol! There's plenty of businesses to view on Empire Flippers.

With regards the escrow side of it, is it normal to wait for income to be received so that it can be verified as described in the accounts provided? For example, if they're quoting an average of £600 pm revenue, could you receive the first month before releasing funds?

And no I'm not buying a site that only been running for a few months.

 

[fisicx]

I'd rather not just in case you buy it lol! There's plenty of businesses to view on Empire Flippers.

With regards the escrow side of it, is it normal to wait for income to be received so that it can be verified as described in the accounts provided? For example, if they're quoting an average of £600 pm revenue, could you receive the first month before releasing funds?

And no I'm not buying a site that only been running for a few months.

It all depends on the agreement you make with the seller. But you don't normally wait to check income.

How does the £600pm income work? What do you have to do to earn the money? Have you thought about how you get the income? If it's connected to a bank account, paypal, stripe etc you might not get anything. And the income is irrelevant. It's profit that matters. Once you take costs and tax off that £600 there might not be a lot left.

If you want someone to look at the site and check any pitfalls you can send a private message. Not the slightest bit interested in getting anything from Empire Flippers. Seems far too much like hard work and I don't do that anymore

 

[NickGrogan]

£600 pm revenue

Revenue or Profit?

£600 per month revenue is about £20 per day.

Are you considering buying a website for 40x the monthly revenue? 40 x 600 = £24k

Is this what people are actually paying?

 

[Chris Ashdown]

If these sites are making all this money why are they selling and how much room for improvement. Suppliers from Far East may suddenly find a larger company to supply you. If you do buy one how much time will the seller spend with you to learn all their skills and systems. companies even small ones probably need months to fully understand how they were run

 

[Dave]

If these sites are making all this money why are they selling and how much room for improvement. Suppliers from Far East may suddenly find a larger company to supply you. If you do buy one how much time will the seller spend with you to learn all their skills and systems. companies even small ones probably need months to fully understand how they were run

They're not ecom businesses so no worries regarding suppliers etc. It's all ads.

 

[Shopclicks]

They're not ecom businesses so no worries regarding suppliers etc. It's all ads.

AdSense or private advertisers?

If it's AdSense read this:

Can I sell my approved AdSense website? - Google AdSense Community

 

[Dave]

Thanks Shopclicks. I've just been reading the same thing (thanks fisicx).

I assume I can create a new account with Ezoic and use that provided the seller removes the AdSense account from the site?

 

[Shopclicks]

I assume I can create a new account with Ezoic and use that provided the seller removes the AdSense account from the site?

How much traffic are you buying? How many organic site visits per month?

 

[Dave]

How much traffic are you buying? How many organic site visits per month?

80-90k
80% Organic

 

[fisicx]

If they are really getting £600/month from Adsense that’s an amazing conversion rate.

If you have to start again from scratch it’s unlikely you will get anywhere near that sort of income. Adsense can take years to fine tune to maximise income.

I’d still be very wary. If this is as profitable as it seems why are they selling?

And that 20% paid visitors could wipe out your income.

 

[Shopclicks]

80-90k
80% Organic

Where did these figures come from?

 

[Dave]

Where did these figures come from?

Flippa and apparently they're verified. However, I've also requested GA access.

 

[Shopclicks]

Flippa and apparently they're verified. However, I've also requested GA access.

GA can be manipulated to grossly overcount site visits. The bounce rate metric is a dead giveaway if this is the case. You need to see server stats for visitor numbers, search console access, check visitor numbers with tools like Semrush. The real number will be somewhere in between all of the figures you can gather.

Other questions:

1. Who is hosting the site after you buy it?
2. If it is kept with the current host, how much will you be paying?
3. If the site stays with the current host, will you have cPanel access?

 

[imbussminded]

Congratulations on taking the step toward acquiring your first website! It's wise to seek out a second opinion and professional advice, especially when entering a new venture like this. While Empire Flippers and similar platforms provide a marketplace for buying and selling websites, it's important to make sure that you have all the necessary legal and financial considerations covered.

There are firms out there that specialize in the legal and financial aspects of buying ecommerce and content sites. These firms can help you navigate through the complexities of due diligence, contracts, tax implications, and other crucial aspects of the acquisition process.

When searching for such firms, look for those with experience specifically in website acquisitions. They should be familiar with the unique challenges and opportunities of buying digital assets. Additionally, consider seeking recommendations from others who have gone through similar processes or reaching out to professional networks for referrals.