If you’re ready to sell an Internet business, you need to map out a game plan for doing so in order to maximize the amount you’ll get for the business.
Here are three expensive mistakes to avoid when you decide to list the company for sale.
Mistake #1 – Comparing Your Internet Business to a Publicly Traded Company When Selling It
It would be nice if every online entrepreneur could sell their Internet companies based on the ridiculously high price/earnings ratios one sees for large publicly traded ecommerce ventures in the stock market. However, in the real world, a privately held business entity will rarely sell at a multiple of hundreds or thousands of times its earnings.
Working with your selling team (Internet lawyer, accountant, and business broker), you’ll be able to come up with a fair price tag when you decide to sell an Internet business.
Related Article – 7 Keys To Picking The Right Internet Lawyer For Your Business
Mistake #2 – Insisting the Buyer Pay Twice When You Sell An Internet Business
Every entrepreneur has future plans for growing their companies. However, if you decide to sell your e-commerce venture before implementing these plans, it’s unrealistic to demand a purchaser pay twice for them.
Few prospective buyers will agree to pay you first for something that doesn’t exist yet, and pay a second time to implement those plans after acquiring your company. They want to buy based on what the company is worth today instead of rosy projections of future value that don’t exist yet.
Mistake #3 – Accepting Too Much of the Sales Price for Your Internet Company on the Back End
If a prospective purchaser wants to pay you a portion of the sales price on the back end through installments or an earnout, you should prepare for the worst by assuming that some or all of those payments will not be made because circumstances often change after the legal documents are signed and the buyer is running the company.
Look at the amount of money that’s being brought to the table to pay you at closing. If you’re happy with that amount, you may want to go forward with the deal and consider the promise of future payments a pleasant surprise if they happen.
These are three of the most common mistakes entrepreneurs make when selling their online business. Your e-company’s Internet lawyer can help you avoid other mistakes during the selling process so that you can get what you want from the deal and move on with your life after the sale is complete.
If you don’t have an attorney yet, you may want to schedule a telephone consultation with Internet Lawyer Mike Young to discuss your options for when you sell an Internet business.