A common problem encountered by sellers when listing their website business for sale is that they have multiple online businesses they control under one ‘roof’ so to speak. The sellers often only keep one set of accounting measures for all the businesses in operation and normally one bank account where funds are deposited.

Multiple site owner tip #1: Create separate entities for each online presence and have them owned by the parent company. This will cost a little more in the beginning, but will more than make up for it on the backside. At minimum, separate bookkeeping measures should put in place to make separating them away from the others more feasible at the time of the sale.

website business for sale

The trouble starts when the owner wishes to sell off one of their businesses and has to divide the business revenues and expenses that are connected with this one element of their entire online business ‘empire’! Most sellers end up excluding basic expenses in the P & L statements that should be present or that will be expensed by a new owner. The seller needs to proportionate all operating expenses related to all of their online businesses and extend these across in amount of the sales volume of the specific site. It is better to make a mistake on the low side and be conservative with the expenses attached to the site, since a new owner will have to deal with the full expense of this overhead for the one business if they purchase it.

Multiple site owner tip #2: File taxes separately for each online business.
Another problem normally connected with these scenarios is the tax return - if requested for due diligence or for SBA financing. With a situation where there are multiple online businesses operated under one business structure and ultimately one tax return, it becomes complicated to digup the financial data from this and support it with the individual business P&L statement .

internet business

Some sellers keep clean books that split the business revenues and expenses, so this is not an issue for them, but for the greater share of sellers with this set up, it can become problematic in determining the precision of the books during due diligence.

Summary: My council, in review of these stated problems, is for a seller to fashion separate accounting measures for every individual business and proportionate all expenses based on the % of gross revenues each site adds relative to the total.
This will supply a more correct and practical valuation of the individual site relative to the whole and avoid difficulties and suspicion that could arise in the due diligence process. It also leads to a faster, cleaner close and a position of vigor in the selling price when negotiating offers.

business broker

Another tactic that can be applied of course, is to sell the entire ’fleet’ of online businesses as a bundle, so all revenues and expenses are included and match up with the tax returns easily. Keep in mind that all of these sales are treated as an asset purchase and that none of the business structure is passed on in the closure of this acquisition.

David Fairley
President, Websiteproperties.com