Exit Strategy – Do you Have One?

Alan — Tue, 08 Apr 2008 19:09:36 +0000

At some point every business owner (not just domainers) look to sell or “exit” the business. In this industry it seems many people are building and building portfolios so someday they will “exit” by selling the entire portfolio to a buyer.

Is this really a valid exit strategy?

It certainly sounds great but it’s also the elusive dream for many domain owners as portfolio buyers are few and far between – at least those that want to pay a fair price.

Keep your head out of the clouds (visit every now and then) and spend time developing a real exit strategy – one which is deeper than simply finding the right buyer. Remember, if you can’t find someone to pay $100,000 for your portfolio today what makes you think you have a better chance of selling a bigger portfolio for $2,000,000 (using the same logic) down the road. Sure, it’s possible but money gets harder to find the higher you go.

Develop an exit plan that contains multiple exit points. Build a smaller portfolio with some great names, have some developed sites, create a brand within a specific sector. So many options but each one will be an exit point in your overall exit plan.

All kinds of exit strategies exist but the question is – do you have one?

Selling a Website. Rich Now or Later.

Alan — Tue, 25 Mar 2008 02:14:45 +0000

We have sold quite a few developed websites over the years and its always interesting to view the offers. From the insane offers (not in a good way) - to the somewhat fair market ones – to the ones that seem very, very good but a bit of a longer payday.

It’s pretty easy to scratch the silly offers from the table so now we have (1) a not so bad offer involving a bulk payment and (2) a pretty great offer with a couple payments staged over time.

I remember when we first faced this dilemma in 2001. The numbers were higher than most people will ever sell a website for so we were on cloud nine. However (and here’s the dilemma) there was a substantial difference between the two offers on the table. Substantial meaning I could pay cash for a Maserati, retreat to the Greek islands for a year, buy one of those crazy jet cards and even have a little money left over to be Client 10 for a few weeks from the spread between both offers.

Only question I had to answer was…

Do we take the smaller offer and secure all the funds upfront .. or.. do we go with the larger offer – taking less now but in 12 months end up way ahead of offer #1?

You have no idea how much I went back and forth on this until one day I called a friend of mine. This guy is self made and worth 8 figures (10 if you include cents). He told me the decision was simple – all you have to do is ask yourself one question.

If you accept the offer (#2) with multiple payments then would you be happy with the amount received from the first payment?

You see his logic was once you defer payment for a portion of your business then you should consider any payment after the first check a bonus. Too many factors including bankruptcy, the economy, currency fluctuations, simple supply and demand – so many that can’t fit here – will be working against you every day. Sometimes the risk will pay off but unless you can afford to take that risk why do it.

We choose #1 – lump sum, one-time payment.

He was right. The company with offer #2 later went bust 3 months before we would have received our second payment.

Present day – happened again last year.

Still not taking anything but a lump sum, one-time payment.

Of course, this doesn’t always apply but at least ask yourself the question before signing on the dotted line – especially in today’s economy.

Newfound Names LLC » Selling a Website

Exit Strategy – Do you Have One?

Selling a Website. Rich Now or Later.