There is a great blog from a VC at Redpoint by Tomasz Tunguz. In it he discusses every kind of SaaS business you can think of. He has a great article that analyses pricing over the last six years (read more). The large trend in SaaS is about a 3-4 times multiple of net. Online businesses are typically calculated from their net profit (income minus expenses), so a business that generates $100,000 a year in free cash flow/profit would sell between $300k to $400k.

To start with, if your a seller, then the business is going to be worth a great deal more to you than it is to a buyer. This is one of the due diligence points that we look through when purchasing a business (real site age). Finding out the true age of a site can be tricky. Domain names that are only a year old doesn’t necessarily mean the business is only a year old. A quick trick is to use archive.org to see what the site looked like in the past.

Most websites have their domain name DNS connected with whoever they bought the domain from. So for instance if you use GoDaddy for your domain name, they also host the DNS. Just to clarify, DNS is what maps your domain name (approbo.com) to an IP address that your computer/web browser uses to find the server your connecting to. There are DNS servers that your local computer connects with to resolve the websites you go to. Typically this is your ISP’s (your local internet connection provider) server, unless you use opendns.org’s servers (which are free and great).

GA or Google Analytics is a great resource for any business owner. The amount of useful reporting and analysis that can come out of the platform is staggering. Many businesses are not using even a small percentage of the power of GA, so let’s discuss a couple things you can do right now to get better data out of it.

A. To start with, do you have GA enabled on every web page? If you are using WordPress, the cleanest plug-in I have found is called “insert headers and footers”. It’s very simple and you just paste the GA code into the header section of this plugin. This will then track every web page that users visit and send a “pageview” to GA.

Preparing for a sale before-hand makes this process much quicker. The best option is to open a new domain register account for just the business/domain you want to sell. This means a new GoDaddy/NameCheap Account, or a new Google ID/Google Domains Account.

What we typically recommend to sellers is to get a new google email address, then create a new domain holding account just for the business they are selling, and transfer the domain to that account. Then it’s as simple as giving the email/password to the buyer, and they change the payment information and password. Domain transferred! This goes for the hosting provider as well, if the hosting details are in the same account as other web properties, that makes it very difficult to transfer.

When purchasing a website, you want to have free traffic from search engines (organic traffic). To see what kind of traffic that is, we want to determine what keywords the site ranks for. There are buying keywords and just research keywords. Having a nice mix of both is great, but the money is when people are looking to make a purchase (end of the purchase lifecycle).

A long time ago, Google Analytics gave us the keywords people used to find a website. You could just share the analytics accounts and be golden. Now that has moved into the search console, which is more of a private area. So how do we find the keywords a site ranks for without getting access to their accounts?

Backlinks are one of the highest ranking factors in Google and many other search engines. These are links to your site (or the website you are going to purchase) from an outside site. They often have anchor text, which is the part of the URL that explains what the link is. The better the site linking to you (in the eyes of the search engine), the better the boost/juice you get from them. You can check previous articles on how to research the domain name, or how to sell your online business.

What are the tools that we can use to check domain name information and its history? This is important so we can see where the domain has been, how many times it’s moved around (hosting companies) and how long it’s actually been in service. We can also research who owns it, and how many other sites they own that might be a conflict of interest.

The first tool we are going to use is “whois”. You can use this from a terminal (MacOS or Linux), or you can use an online one like:

Doing proper Due Diligence on a web site can be daunting. Don’t despair! The more you do this, the quicker and better you get at it. There are tools all over the internet that can drill  into where traffic comes from and what the site has been up to.

The main question we are trying to ask is: “Is the seller properly representing this business, and is this something I want to own and manage”. There are always going to be problems, you have to determine if your level of problem-solving and knowledge matches up with the business you are looking at. If not, can you easily outsource those missing parts? Many times a seller has custom programmed a business from scratch, and they say it’s easily taken over by someone else. That is rarely true, many are not good at documentation, so taking over someone else’s code is time consuming and expensive.

-We are not licensed attorneys, so please do not take this as Legal advice. Always consult council before signing anything you are not familiar with and do not completely understand.

An NDA is abbreviated as a Non Disclosure Agreement. They are typically sent by the seller (or seller’s broker) to a prospective buyer.

The idea is to give each party some comfort (these are always weighed more to the sellers interests, however). If the deal falls through, or never goes further, the seller needs some “insurance” that the buyer isn’t going to steal the information and duplicate the business (or improve their own similar business).

We get questions about what the actual process is to purchase a website (and many sellers are confused since this dates back to the origins of mergers and acquisitions). It’s a business like any other; the typical process applies for purchasing. For this example, we are going to use a broker scenario where they are the middle-man to the transaction.

Summary of the process:

1. Broker emails out the listing(s), or you find a business through networking and outreach.
2. Get/Request the prospectus if there is one.
3. Do basic due diligence on the site and make sure it passes your “rules.” This includes running through SEMRush if you have it, and any keyword research you can perform.
4. Customize and send a Letter of Intent (LOI) with your purchase price, terms, and offer. Try to spell out the main details that will be a negotiation point for the business sale.
5. Do some negotiations back and forth probably through email; it may be quicker to jump on a phone call with all parties. This can happen before sending the LOI as well.
6. Seller signs the LOI and returns to you.
7. Do the complete due diligence - mainly financials, look through tax returns, P&L’s, sales data, etc. to make sure it all adds up. In the LOI you specified how much time is allotted for this, and they are not allowed to pursue other sellers (they can have a backup list but not sell it out from under you). This is where you are really looking into who the seller is as well, are they responsive? Are they willing to help you make this business work? If they go dark during due diligence, you can still walk away. Do not get too invested in a business at this point.
8. Submit the purchase agreement with funding and closing dates, make sure financing is in place to meet the closing date. The purchase agreement should nail down specifics regarding training, payment dates, anything you think is important to finalize the deal. Often there is a deposit paid at this point that is non-refundable. This means the buyer is able to perform, and the seller gets the deposit if not.
9. Close, fund, and post-sale transition. There is where the work beings, getting the business under your control. The seller should have documentation to help with this.

Many inexperienced buyers or sellers might want to skip right to the purchase agreement, but the issue is you don’t have any recourse if the financials don’t work out. You can add that language to the agreement, but that adds unnecessary complexity.

If you are interested in selling your web property (online business), there are quite a few considerations.

The top ones are:

• Is my business ready for a sale?
• How do I find a buyer?
• What about scammers or competitors stealing my ideas?
• Should I use a broker, and who?
• How do I price it?
• What documents do I need?
• What is proof of income?
• How do I prove my traffic sources?
• How much analytics data do I make public?

These are important considerations. Contact us today and we can work through them.

What are the tools that we can use to check domain name information and its history? This is important so we can see where the domain has been, how many times it’s moved around (hosting companies) and how long it’s actually been in service. We can also research who owns it, and how many other sites they own that might be a conflict of interest.

The first tool we are going to use is “whois”. You can use this from a terminal (MacOS or Linux), or you can use an online one like:

There is a great blog from a VC at Redpoint by Tomasz Tunguz. In it he discusses every kind of SaaS business you can think of. He has a great article that analyses pricing over the last six years (read more). The large trend in SaaS is about a 3-4 times multiple of net. Online businesses are typically calculated from their net profit (income minus expenses), so a business that generates $100,000 a year in free cash flow/profit would sell between $300k to $400k.

GA or Google Analytics is a great resource for any business owner. The amount of useful reporting and analysis that can come out of the platform is staggering. Many businesses are not using even a small percentage of the power of GA, so let’s discuss a couple things you can do right now to get better data out of it.

A. To start with, do you have GA enabled on every web page? If you are using WordPress, the cleanest plug-in I have found is called “insert headers and footers”. It’s very simple and you just paste the GA code into the header section of this plugin. This will then track every web page that users visit and send a “pageview” to GA.

To start with, if your a seller, then the business is going to be worth a great deal more to you than it is to a buyer. This is one of the due diligence points that we look through when purchasing a business (real site age). Finding out the true age of a site can be tricky. Domain names that are only a year old doesn’t necessarily mean the business is only a year old. A quick trick is to use archive.org to see what the site looked like in the past.

-We are not licensed attorneys, so please do not take this as Legal advice. Always consult council before signing anything you are not familiar with and do not completely understand.

An NDA is abbreviated as a Non Disclosure Agreement. They are typically sent by the seller (or seller’s broker) to a prospective buyer.

The idea is to give each party some comfort (these are always weighed more to the sellers interests, however). If the deal falls through, or never goes further, the seller needs some “insurance” that the buyer isn’t going to steal the information and duplicate the business (or improve their own similar business).

Most websites have their domain name DNS connected with whoever they bought the domain from. So for instance if you use GoDaddy for your domain name, they also host the DNS. Just to clarify, DNS is what maps your domain name (approbo.com) to an IP address that your computer/web browser uses to find the server your connecting to. There are DNS servers that your local computer connects with to resolve the websites you go to. Typically this is your ISP’s (your local internet connection provider) server, unless you use opendns.org’s servers (which are free and great).

Preparing for a sale before-hand makes this process much quicker. The best option is to open a new domain register account for just the business/domain you want to sell. This means a new GoDaddy/NameCheap Account, or a new Google ID/Google Domains Account.

What we typically recommend to sellers is to get a new google email address, then create a new domain holding account just for the business they are selling, and transfer the domain to that account. Then it’s as simple as giving the email/password to the buyer, and they change the payment information and password. Domain transferred! This goes for the hosting provider as well, if the hosting details are in the same account as other web properties, that makes it very difficult to transfer.