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.

BTW: How much is your membership or subscription site really worth if you want to sell it to another publisher? Check out our sister site’s special report on site valuations here.

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!

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!

For all the details on this event click here.
(Again, please note the deadline of Thurs Jan 27th noon ET.)

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 .

In the meantime, if you are interested in selling a subscription service or site — or in just finding out whether you should consider selling someday — definitely check out Subscription Site Insider’s upcoming live webinar: New Webinar: Subscription Site Valuations: How Much Is Your Online Business Really Worth?

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.

I’m one of them. And I know several more who’ve reached out to me personally, as well as several who complained on other private industry email discussion groups. The flurry of handraising makes me wonder if this was all a clever tactic on RBI’s part to raise awareness and competitiveness among buyers for the titles they’re shuttering. Intended or not, it’s sure working.

Happily all of this attention has helped in one key way — officials at RBI are at last communicating with the outside world about selling the titles. I’ve received two emails in the past 24 hours from folks there. They both said “If we enter into 3rd party sales and the requested titles are available, we will contact you by May 3.” So that must be their party line.

Worth noting, the title’s websites say they’ll be shuttered and the content will not longer be online as of April 30th. So what’s with the May 3rd deadline? Something’s happening behind the scenes next week for sure.

According to this new data from SubscriptionSiteInsider.com’s own annual survey of subscription and membership site executives, the industry is looking at expansion for 2010.   302 publishers and other executives responded to these questions — a record for industry studies.   They included b2b content sites as well as subscription sites selling content access to consumers. All of the executives were actively involved in a paid content subscription site (we surveyed other online and offline publishers separately.)

Some analysis:<ul>

<li> Although mobile publishing is hot in the media, these executives are apparently far more interested in expanding in the platform they know is proven to work for them — subscription sites.</li>

<li> Experienced site publishers are interested in developing sites based on offline brands… but not so much that they’ll go out and look for the deals aggressively.  This is an opportunity for offline brands, ranging from branded instruction books and TV shows, to celebrities worthy of membership-based online fan clubs, to reach out to publishers who already know what they’re doing in the space.  We’ll definitely be covering the hows of this type of deal in 2010.</li>

<li> Folks are also interested in acquisitions, but again mainly in a passive manner.  I actually suspect this is because there are very few information sources currently for subscription site acquisitions… we’ll be launching an M&A center fairly soon to fill that gap, so contact me if you want to be listed as  a buyer, seller or advisor!

<li> Although execs are not that interested in trying to turn free content into a paid site (a tactic that has worked well in the past and we’re building the Case Study Library to prove it), I suspect paid ebook properties will provoke a different answer.

<li> Launches, launches, launches.  Well, your first site is always the hardest.  Once you’ve got the tech, content, and marketing nuts cracked to your satisfaction, why not cookie cutter your systems and processes out over additional sites?  It’s a very normal business model for offline subscription newsletter publishers.   So I expect to see a lot more of that too, with typical site publishers owning multiple titles.

What’s your take?  Let me know below….

In my experience having both bought and sold media properties, and worked for a company that was a heavy grow-by-acquisition player,  in a genuine M&A process the length of courtship is generally decided far more by the seller, than the buyer.    When a seller is truly ready to sell, they sell.  Sometimes it’s prompted by bucketloads of money, but if the seller is also the founder, usually money isn’t the main motivator.  They’re just ready to sell, that’s all.   It’s like a guy hitting that moment when he’s ready to get married, he wasn’t before and now, bang he is.  Once he is, the wedding happens pretty quickly, even if he hadn’t been dating anyone shortly before, or even if the current girl isn’t as great as  a past one had been.

On the media company buyer’s side, sincere courtship can take a much longer time.  You’re schmoozing the properties you want to buy in hopes that someday when they hit that “want to sell NOW” wall, you’ll be on the shortlist of people they call first.  You may even be able to seal a deal before it hits the open market and the price possibly goes up.  I’ve known  media company buyers who spent literally decades  making friends with the people whose companies they wanted to buy, keeping in touch every quarter with a call, a note, and perhaps an annual lunch.

But the key is the word “sincere”.  You don’t waste your time schmoozing a property you’d not really interested in.  If you’re not ready to act,  why bloat your calendar with all those lunches and dinners?  Unless perhaps you’re a professional Romeo and who loves the pursuit but not the marriage.

If a buyer is sincere, they’ll be ready to act fairly quickly, and sign an initial offer letter within a matter of weeks.  The due diligence may take longer, often dictated by what shape your records are in (and for smaller publishers, usually they’re in somewhat bad shape.)  But even due diligence should not take longer than three-six months max.   If a dealmaker is dragging his or feet longer than that, either their access to cash isn’t as easy as they made out, or they’re enjoying the courtship far too much.  Get out of the relationship.  If you’re ready to get married, don’t waste your time and emotional energy by sticking with a guy who really only wants to date you.