How To Sell Your Website or Online Business
When it comes to selling your website or business, there are a lot of options out there to choose from. There are traditional M&A/business brokers, online marketplaces, and specialized website and digital business brokers. Where you choose to sell your website can have a significant impact on your valuation and amount of money you end up putting in your pocket.
The best place to list your business for sale will likely depend on a number of factors, such as: the size of your business, the amount of work you are willing to put in, your tolerance for fees, negotiation skills, and so on. We’re going to walk you through the differences between the various options out on the market, the differences between marketplaces and brokerages, and also tell you where you shouldn’t sell your business.
Selling with a Brokerage or a Marketplace
There are two legitimate options when it comes to selling your online business: with a specialized online business broker or with an online marketplace. Online business brokers are specialized and certified individuals or companies who connect you with potential buyers and help out with the due diligence, negotiation, and closing aspects of selling your business. Selling your business through a marketplace is more like a “for sale by owner” process where you are responsible for every step of the deal process from find the buyer to answering questions and handling the closing process.
As you would guess, selling with a brokerage is more expensive as fees tend to be higher. When making the broker vs. marketplace decision, most sellers tend to think they are okay with spending a little more time and the process taking a little bit longer if they can pay lower fees. However, simply making the decision based off of fees could actually be worse for you.
Here are the 7 top things you should consider when deciding to sell your online business with a broker or on a marketplace:
- The size of your business and how quickly you want to sell
- Amount of work and hours you are okay putting in
- The potential buyer base
- Average sale prices
- Transaction Fees
- Negotiation and due diligence
- Legal documentation and transfer of assets
Where You Shouldn’t Sell Your Website
There are a handful of places where we recommend you NOT list your business for sale for various reasons:
- Facebook Groups (or Marketplace)
- Online Forums
Serious buyers aren’t going to sites like this to find websites or businesses for sale. You’ll run into a ton of tire kickers and time wasters and expose your business to more eyes than you should.
Brokerage vs. Marketplace: 7 Things to Consider Before Selling your Website
1. Size of your Business and How Quickly you Need to Sell It
My general rule is: if your website is worth $100k or more, use a broker without question. If your website is worth less than $100k, you can go either way, depending on how quickly you want to sell your site. Generally, selling with a broker will result in a quicker sale, since they have a huge buyer base of qualified investors with serious capital who are loathing for great opportunities.
For sub $100k sites, you will probably pay anywhere from 3%-5% more in selling fees for using a broker over a marketplace, so at this size range it really depends on how fee conscious you are and how much work you want to put into selling it yourself.
Using a marketplace typically takes longer because it is dependent upon a buyer actually finding your listing on a marketplace. Most marketplaces tend to have thousands of listings, which makes it a lot less likely that the right buyer finds your listing as quickly as they would through a broker. If you are in a fire-sale situation and need to sell your business within the next few weeks and don’t care how much money you sell it for, then putting it on an auction-styled marketplace could be a good solution – but we never recommend this otherwise.
If you don’t know what your website is worth, reach out to a broker and ask them for a free valuation. Contact us and we’re happy to provide one free 🙂
2. Required Time and Effort
If you sell on a marketplace, you will receive virtually no help from anyone. The marketplaces take a % fee for connecting you with a buyer, not for helping you communicate, negotiate, and execute a transaction with one. You will be responsible for answering all buyer questions, getting on multiple phone calls, providing the same info over and over again. And in the end, 90% of the people you talk to are likely not serious or legitimate buyers. It sucks spending an hour plus providing super detailed answers to questions, only to get an offer that is 80% seller financed; or for them to never respond and use that information for competitive purposes.
With a broker, you are going to pay a higher fee, but you are going to do way less work. Here are some services a broker provides that are super valuable to a seller:
- Prepare a professional investment presentation
- Handle NDA’s and information sharing to make sure your information isn’t stolen for competitive purposes
- Communicate with all buyers: answering questions, initial phone calls, etc.
- Negotiate the best offer for you
- Help guide you through the legal documentation phase
- Ensure all assets are transferred properly
- Provide escrow services to make sure the money is in safe hands before you give the keys away
Overall, you get so much more help and assistance out of a broker which helps prevent you from getting screwed over, and significantly reduces the amount of time you have to put in to the selling process.
3. The Potential Buyer Base
Brokerages have a highly qualified buyer base of people who are eager to invest their money in online businesses. Brokerages will send your listing out to targeted buyers via email, and they tend to have very high open rates on those emails. Brokers have relationships and know people personally – marketplaces do not. They have phone numbers and people who will pick up the phone when they call.
Marketplaces have the same. However, as I mentioned earlier, it’s all about the potential buyers actually finding your listing on the marketplace. And this is a lot more difficult to do when there are thousands of listings they have to sort and sift through.
Additionally, a brokerage will list your website not only on its website, but also on a handful of other marketplace type websites, such as BizBuySell.com and BizQuest.com at no additional cost to ensure your listing reaches the maximum number of potential buyers.
Brokers also list on the same marketplaces you would, in certain instances. We, for example, list all of our businesses on Flippa.com, if we find a buyer from Flippa, we share our commission we earn with the marketplace. So we reach the same buyers you would on the marketplace, but also thousands more through our proprietary buyers list and the other sites we list one, such as the ones mentioned above. It costs no more for you but greatly expands the buyer base compared to only using a marketplace.
4. Valuation Multiples
On average, websites sold through brokerages receive higher valuation multiples, meaning you are more likely to sell your business for a higher price. Here’s why:
- Brokers take a lot of pride in their reputation, and selling a bad business makes for a bad reputation. These firms will do a lot of diligence and vetting on their own before selling a website, and potential buyers trust and value this. Because of the trust and reputation, buyers are willing to pay more.
- For higher priced websites, they have a bigger and more accessible buyer base, which creates more competition. If you list a $1M site on a marketplace and it gets 5,000 views, how many of those 5,000 people actually have $1M of cash to buy it? Probably less than the amount of people the broker knows that have that much money to buy it. This creates more competition amongst buyers which results in higher sale prices.
- They are better negotiators.
5. Transaction Fees
The one place brokerages lose is transaction fees.
If you sell your website with a broker, you will pay a higher % in transaction fees.
Average Marketplace Transaction Fees:
The most common marketplace, Flippa.com (and our recommended marketplace if you go that route) charges:
10% for websites that sell for $1-$499k
7.5% for websites $500k-$1M
5% if the sale price is $1M-$5M
ExchangeMarketplace, which is only for Shopify sites, charges 11% regardless of sale price.
Average Broker Transaction Fees:
Less than $500k: 10%-15%
$500k-$1M: 8%-12% (the big dogs charge up to 15% for sub-$1M)
Fees tend to vary a lot depending on the broker. A firm with less than 10 people will probably be on the lower end, while the big guys (FE International, QueitLight, etc.) will be on the higher end because they have more fixed expenses to cover.
But: broker fees are almost always negotiable. You’ll get quoted on the higher end, but they can typically move a little lower, especially if you have a really good business.
Also, keep in mind, brokers do not even get $1 if they don’t bring a buyer to the table, whereas, some marketplaces will charge you an upfront fee for listing.
6. Negotiation and Due Diligence
This goes hand in hand with #2 above, but I thought it worth mentioning again. Receiving an offer for your business is an awesome start, but this is when a lot of the work begins. First off, there are a lot of small points to negotiate, depending on the size of your business.
Depending on the structure you might have seller financing, earnouts, a required amount of time to stick around the business post-closing, etc. Having a broker who has experienced all types of transactions and is familiar with what is standard or “market” is extremely helpful when it comes to negotiating a final offer.
And in conjunction with a final offer is due diligence. Once an LOI is signed a buyer will want to take a deep dive into the financials, analytics, employees, the website itself, etc. There will be a lot of document requests and questions to answer. If you aren’t familiar with selling an online business, having someone by your side to help protect you is invaluable for more complex transactions.
7. Legal Documentation and Transfer of Assets
Transferring assets is straight-forward for the most part, but it can get tricky if you have certain non-transferable monetization methods such as Adsense, Amazon FBA, eBay, etc. Not knowing how to properly transfer these assets can ruin a deal.
Additionally, there are varying degrees of legal documents that will need to be drafted. We recommend always using a lawyer, but for people who do not want to spend the money on one, a broker will be dangerous enough to help you get through the docs. They will also have “template” documents for you to work off of and will know exactly what documentation is needed for selling the business, setting up seller financing, transferring copyrights, trademarks, patents, etc.
Again, just helpful to have someone with experience by your side if you are unsure how the process works.
Where to Sell your Online Business or Website: Marketplaces
There are a number of marketplaces out there, but here are a few where you can list your website for sale if you want to run the show yourself:
- Flippa.com – Flippa is the largest marketplace out there and is our recommended option for people going the marketplace route. On this marketplace you have the option of listing your site as an auction or as a classified. We recommend only doing auctions for really small sites (sub-$25k or so).
- ExchangeMarketplace.com – only for Shopify sites. It’s worth listing it on here if you are a Shopify store, but we’ve never found a lot of serious buyers on this platform. I would definitely suggest also listing it on Flippa.
- BizBuySell and BizQuest – these sites are more so for traditional brick and mortar businesses, but its definitely worth listing on here in conjunction with the above. The downside is you have to pay per month to list your site on these places. There are also a handful of other similar sites out there, but this are the two biggest.
Where to Sell your Online Business or Website: Brokers
I would love to just list ourselves on this section, but there are a handful of brokers on the market and it always makes sense to talk to more than just one. Some specialize in certain types of sites such as SaaS or Affiliate, while some might have more expertise in certain industries such as Automotive, Finance/Business, or Home & Garden.
I’ll give you a list of some of our favorites and break them down by size.
The Big Dogs: these are the guys you should be speaking to if you have a multi-million dollar website or online business and are okay with paying higher fees.
- FE International
- Empire Flippers (I consider these guys more of a hybrid marketplace/broker. You will pay the highest fees and get the least assistance with the sale process, but they do a lot of volume and have a lot of buyers)
The Middle-Market: these brokers are best suited for deals less than $3M in value, who have lighter fees (in some cases), and offer a more personalized service.
- SaleAway (ourselves!) – we’re a team of 3 guys who own and manage our own portfolio of online businesses. We have backgrounds in traditional M&A, but a passion for online investing. We’re super high-touch and personable – you’ll get one of us as a lead broker while the other two work behind the scenes to bring the best deal to the table.
- Acquisition Station
- Digital Exits
- Website Properties
- Deal Flow Brokerage
- Upward Exits