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A. Russell

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Jun 2, 2020
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Does anyone have experience with buying an existing online business? I have just been browsing, and there are a lot of online businesses for sale that claim to profit several times the asking price in the first year. I've attached an example below. For an asking price of $15,582, they claim a profit that amounts to $36,000 return in 12 months.
OnlineBusiness.png
 

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MJ DeMarco

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Where are you browsing?

They can "claim" anything they want, unless the numbers back it up, it means nothing.

You would discover the real numbers in due diligence, looking at bank records, taxes, etc.

And selling price at .5X earnings does indeed, raise red flags.
 

Mike Partee

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Haven't bought, but I've sold and used to work at a brokerage.
So I've seen quite a lot of deals...

I mean, it could be that this is a distressed seller that wants a quick deal, but that's a low probability. Low multiples like this usually means a supplier dropped out, owner can't get customers anymore etc.

I'd be more interested to see the Month-to-Month trendline.
A sudden drop is a surefire way to know what's going on.
 

A. Russell

Contributor
Jun 2, 2020
39
27
43
Thailand
Where are you browsing?

They can "claim" anything they want, unless the numbers back it up, it means nothing.

You would discover the real numbers in due diligence, looking at bank records, taxes, etc.

And selling price at .5X earnings does indeed, raise red flags.
How did you find buyers for your businesses MJ? Did you list them? Did people come looking for you? Did you have a bad a day and tweet about it, like Marcus Persson did?

Is it a viable shortcut to owning an online business?
 

A. Russell

Contributor
Jun 2, 2020
39
27
43
Thailand
Haven't bought, but I've sold and used to work at a brokerage.
So I've seen quite a lot of deals...

I mean, it could be that this is a distressed seller that wants a quick deal, but that's a low probability. Low multiples like this usually means a supplier dropped out, owner can't get customers anymore etc.

I'd be more interested to see the Month-to-Month trendline.
A sudden drop is a surefire way to know what's going on.
Are there reputable brokers who will only list a company if it is in good health, or at least advise a prospective buyer on what to expect?

I guess the one I found wasn't so reputable. Here is another one of their listings :)

Dildo.png
 

Mike Partee

(Formerly UnrealCreative)
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Are there reputable brokers who will only list a company if it is in good health, or at least advise a prospective buyer on what to expect?

I guess the one I found wasn't so reputable. Here is another one of their listings :)

View attachment 37844
Yes.

This site aggregates listings from the various brokerages quiet well:

If you're looking at ecom go with Empire Flippers, FE International, Quietlight Brokerage.

If you're looking at content/affiliate/display ads monetized sites, check out Investors Club, Motion Invest.

All of the above are reputable and vet all businesses before listing.

If you can do your own Due Dilligence you can look at places like Flippa or Shopify Exchange, but as you've witnessed the quality is questionable. But you have services like Centurica that will do DD for you.

Also just keep in mind online businesses were SUPER propped up all through 2020 due to covid, low supply and immense demand for income producing online properties that can't be locked down. So just keep this in mind, either valuations will lower as the world opens up, or the high multiples are here to stay since they've proved valuable over 2020.

Hope it helps.
 

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