Chapter 5

Things the Buyer Will Want To Know About Your Site

Ok! So you've got a potential buyer. They're asking questions, things are starting to sound official and more likely to proceed.

The buyer is going to want to know a great many things about your site.

Hopefully this section will give you a heads up so that you can be prepared to answer their questions.

First things first. Due Diligence. All companies are probably going to want to do this. Due Diligence is a term they use that basically means investigate.

They will want all kinds of access to your stuff, some of which you might not want to give but might not have much of a choice.

They'll want to see your accounting books, your sales figures, your site traffic logs, your business plan and model, your customer lists and dozens of other things.

Many of these things you may not have.

I didn't have a business plan, my accounting books were a mess, I used to routinely delete my server logs so I didn't even have those.

And anyway, the company can go through all this stuff, glean valuable info then decide they don't want to buy the site. Sometimes they just want to see how well you're doing and if they see what's working for you they can copy it for themselves.

But like I said, you may not have much of a choice.

I think that Due Diligence is a term they learn in college so it's kind of an automatic assumption on their part. It's their first step so there's not much you can do about it.

Before they do their due diligence, ask them to sign a Non-Disclosure agreement. This basically says that they won't disclose what they find to anyone else.

They'll probably ask you to sign one as well. These are good. We REALLY like Non-Disclosure agreements!

NDAs are usually like a page long or less, and they are very simple to understand. Basically it says "I'll be good if you're good, and I won't steal your trade secrets".

You don't really need a lawyer to draw one up.

The company will probably have one already and you'll just sign it and they'll sign one too. If nothing else, you can run to the library and grab a book of basic business legal forms. Their generic NDA will suffice.

Be sure you have a copy of this in your hands before you hand over any info. Don't be rude, but make sure you have them sign one.

Next they might want you to sign a non-compete agreement right away. This just says that you agree not to compete with them.

Stay away from this if you can. Absolutely try not to sign this unless it's part of the final contract, and then only if necessary.

If someone wants me to sign a Non-Compete, then the price of whatever I'm selling them goes up drastically. We'll talk about this later.

So what exactly will the company want to know about your site? Here's a list of things they will probably ask you:

  • Your Site Traffic (past and present)

  • Monthly income (if any)

  • Past Profits and Losses

  • Does the site owe money to anyone

  • Are there any lawsuits pending

  • Have there been lawsuits against the site or your company

  • Your business plan (how you plan to make money with the site)

  • How much server space the site takes up

  • How much bandwidth the site uses in a day/week/month

  • How many people are necessary to keep the site running

  • Will they have to hire someone new to run the site

  • Which type of server is the site running on (Unix/WindowsNT)

  • How long it will take to switch the site over to them

  • Will you stay on to help transition, and if so for how long?

  • Number of Customers

  • Number of Members (if it's a member type site)

  • Any extra costs

  • Any ideas you have for expanding the site? Any future business plans that the site could perform

  • Does the site require any special software

  • Does the site come with any special software

  • Are the graphics original and are they included in the sale?

  • Is there any third party involved in the site?

  • Are there any trademarks or copyrights associated with the site and are they included in the sale

Do you need each and every one of these things? Not necessarily, like I said before, when I sold my first site I was so unorganized that I didn't have many of those things.

But they did ask, so even if your response is "I never kept track of that" be sure to have that response ready.

Basically they are going to want to know how THEY can make money with the site.

How will owning the site be beneficial to them?

You should be crystal clear on those 2 explanations!


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