1. Site sellers failing to do due diligence on the would-be buyer’s operations, cultural “fit” and finances.
2. Sellers who haven’t prepped their internal accounting and legal records properly prior to a sale.
3. Sellers who hide key information from would-be buyers.
4. Sellers who reveal company secrets to buyers before checking with their lawyer about what’s OK to reveal.
Having sold a membership site myself in 2007 and evaluated buying several others since, I can tell you that mistake number two (failure to prep internal records) is the biggest hurdle for small-mid-sized business owners. You’re so busy running your site that you never have time to clean up the paperwork mess.
According to research firm IHS iSuppli, mobile app sales — including subscription apps, one-time fee apps, and upsales within apps — will rise this year to $3.8 billion.
I’d be inclined to trust this number, especially as Apple and Google’s Android just launched subscription app offerings this year. Recurring revenues are easier to count on growing steadily, for now, than one-time download sales.
For example, Popular Science already sells subscriptions on both platforms and is claiming nearly a quarter of a million dollars in revenues from them. (They’ll be one of the publishers speaking at Subscription Site Insider’s exclusive webinar on how to market and price subscription apps later this month. Here’s a link to register if you’re interested.)
Although selling subscriptions via Apple, Google, et al has its downside — you can’t control the marketing as much as if you were selling directly and the platform takes a whopping 30% of revenues as their cut — at least the cash can be quick. Popular Science sold 8,000 Apple iPad subscriptions in their first three weeks. And, Apple pays publishers weekly.
If you don’t have a famous name brand, another way of quickly monetizing the app market is to launch your own app company and pray for an M&A. Yahoo bought app IntoNow just a few weeks after it launched. MergerNetwork has been running a listing for another app firm, which launched in November and now claims $65k in monthly “profits” (with new publishers one is never sure if what they call profits are actually just gross revenues minus Apple’s cut.) Apparently this unnamed SF firm would happily sell their 11 paid apps for $700k if you’re interested.
Kind of reminds me of the AdSense goldrush of a few years ago when thousands of web developers were shoveling up hundreds of thousands of “content” sites with Google ads with no ambition beyond flipping them within weeks to would-be Internet entrepreneurs who wanted the proverbial easy income with little work lifestyle.
Baran Rosen, Founder & President, Whitestone Communications
Mr. Rosen has been an M&A leader in the publishing, information and training industries since 1986, and founded Whitestone in 1994. He carefully guides clients through the intricate process of successfully selling and buying businesses and product lines. His particular strength is in B2B media properties.
In addition, Rosen’s team publishes Whitestone’s annual Who’s Buying Whom on M&As in the publishing, information, Internet and training industries. Whitestone also has an extensive network of relationships with major venture capital and private equity funds as well as lending institutions to help them can readily source capital for Whitestone clients for acquisitions and investments.
John Doyle, Founder & MD, Peachtree Capital Advisors
Doyle’s background includes stints as an M&A and private investment advisor at both Veronis, Suhler, Stevenson (VSS) and Jordan Edmiston (JEGI), as well as the West Coast film and TV industry. He has closed more than 20 M&A transactions and holds his Series 7 and 24 licenses. His particular strength is in B2C digital media transactions and investments.
Note: Tickets are still available for this event, which includes live Q&A with Rosen and Doyle (and yes, you may ask your questions under the cover of anonymity). Ticket-holders get access to the live event plus an on-demand video version afterwards. If you are already a Subscription Site Insider premium member, your tickets have been emailed to you. Otherwise click here for details and to sign up if you so desire!
Ever wonder how much your paid content site might be worth to private equity investors or on the M&A marketplace? Or, what you should be doing today to prep your site for the highest possible valuation in the future?
You’re invited to attend Subscription Site Insider’s exclusive webinar next week on media site valuations, featuring experts from Whitestone Communications and Peachtree Capital. (Registration deadline: Thurs Jan 27th noon ET)
Here’s what you’ll learn:
- What sorts of multiples (X 12 month profits) are site valuations showing; and why are some sites worth much more than others?
- What types of sites are investors and business buyers most interested in
- Specific tactics site owners should take right now to increase their attractiveness to potential investors or buyers in the next 12 months.
- Values of B2B sites, information services, and online training services.
- How much B2C digital media sites are worth now to investors or buyers and who is looking to invest in them.
- How are hybrid-model sites with multiple revenue streams valued differently than plain vanilla sites?
**Plus, you’ll get to ask your valuation questions live during the webinar with total anonymity!
Mark Daoust, Founder of Quiet Light Brokerage, just contacted me to let me know he’s offering a 10% referral fee. Quiet Light specializes in acting as a broker between buyers and sellers of small-mid-sized sites mainly in the $100k-$1 million range. They cover a variety of business models, including subscription content sites and paid membership sites, but also including other ecommerce and ad-based sites.
Mark’s team typically receive a 10% commission on any sales they help broker. In turn, they are happy to give people who help them find sales to broker 10% of that commission. So if you refer a site to them that winds up being sold for $100,000, they’d get $10,000 and then cut you a check for $1000. Which isn’t bad for making a quick introduction. (Psst, if you decide to sell your site through them, tell them SubscriptionSiteInsider sent you.)
Actually we ourselves are clients of Mark’s, only on the buyer side. We’re looking to buy b2b niche content sites and we’re hoping Mark’s team can help us find some. So, we’re very happy if you refer folks to Mark whether or not we end up with any commission .
We’ll have three top experts on our panel discussing how they determine valuations and what sorts of subscription properties are looking to be red hot for site buyers in 2011. Yes, there’s also be plenty of time for live Q&A so you can ask valuation questions in a private members-only setting.
Live Media Attention Webinar
$247.00 webinar ticket FREE with membership!
Free Executive Summary!
Executive Summary: Online Dating & Matchmaking Benchmark Report
Download your FREE copy of the Executive Summary of this key research into the biggest niche of paywall sites.
According to research firm IHS iSuppli, mobile app sales — including subscription apps, one-time fee apps, and upsales within apps — will rise this year to $3.8 billion.
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