Buy a Website to Acquire the Website Seller’s Knowledge
Website buyers acquire websites for multiple reasons. The number one reason for website investments is to receive cash-flow. However, many website buyers overlook another key reason to acquire websites: The website buyer receives knowledge from the website seller.
By acquiring a website, a website buyer gets to learn how a website seller operates a successful website business on a daily basis.
This is very important for a novice website buyer who may not have very much experience running a successful website business. Instead of learning by trial-and-error in a new or start-up website, a website buyer can learn quickly from an experienced website business owner.
Training Period
Every website purchase agreement should include a mandatory training period during which the website seller teaches the website buyer how to operate the acquired website successfully. It is extremely important for the website buyer to include this clause into the agreement.
Every buyer must learn as much as possible from the seller about how to run the website. As a website buyer, never acquire a website unless the website seller agrees to provide the proper training.
The training period can last anywhere from few days up to 90 days. Sometimes the training period can even go as high as 120 days. The length of time depends on the level of complexity of the website’s operations. The more complex the website is, the longer the training period necessary for the website buyer to learn how the website is run.
The length of time also depends on the website buyer’s knowledge and experience level in the specific website niche. A website buyer with little to no experience in the niche would require more training.
Consulting Agreement
In some instances, the website seller may agree to a more expansive consulting agreement over a longer time-frame. This could last for as long as a year or more. This consulting agreement is generally a paid agreement in which the seller is compensated financially for his time and advice. This usually takes place when the website being sold is highly complex to operate. Or when the website seller has very specialized knowledge that the website buyer would need to continue to operate the website successfully.
In certain cases, the website seller may have personally branded himself or herself as the supplier of the product or service on the website. In this way, the new website owner may need this personal brand, this individual, to stick around for the website to continue to be operated successfully.
For example, the website seller may be a popular author of articles on an AdSense information website. As such, the readers of the website expect to continue to receive articles from this author. If the website is sold and this author stops writing articles for the website, the readership may decrease, and therefore the revenues suffer. In this case, it is in the website buyer’s interest to continue to receive articles from this author. Thus, the website buyer may have to pay the website seller a fee to continue to produce articles for the website.
Specialist Website versus Generalist Website
As indicated above, a more elaborate training period or consulting agreement is usually necessary when we are dealing with a specialist website. These are websites that require specialized knowledge to be able to run them optimally. And therefore, either the website buyer already has the specialized knowledge or he has to acquire this knowledge from the website seller.
I remember about 3 years ago, we sold a specialist website that was priced at just over $1 million. The website seller was a very experienced AdWords specialist. The website received up to 10 million visits per month. The website seller was able to generate this level of traffic at a very low cost-per-click (CPC). The keywords in his advertising campaigns produced a ton of targeted traffic at a relatively low cost of as small as 1 or 2 cents per click.
The website buyer had a portfolio of websites in that niche. As such, he was interested in adding that specific website to his portfolio and, at the same time, learning how the website seller managed his AdWords campaigns in order to transfer this knowledge to the rest of his website portfolio.
In a nutshell, by acquiring this website, the website buyer acquired cash-flow as well as invaluable knowledge. It turned out to be a really good investment for this website buyer. Not only did he acquire new cash-flow but he also improved the cash-flow of the other websites in his portfolio.
This is how a website buyer can buy a website to acquire knowledge.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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