Selling a business without a broker

BusinessesForSale: Can you briefly tell us about the business you are selling...

Victor Raff: If you are a parent you face many choices: which school is right for your child, which doctor’s clinic to choose, where to buy your kid’s clothes, etc. Many people ask friends, relatives or neighbours for help.

However, often parents feel they don’t have enough options and advice, and the internet doesn’t guarantee accurate information. I decided to create a website which would solve this problem, ParentingInformed.com.

Everybody can propose a website to our directory and then rate and comment each resource, based on personal experience. Users are able to browse the directory and search listings based around their address – for example you can find all doctors located within 20 miles of your home.

Our goal is to become a source of collective experience for parents and offer the information they need

Our goal is to become a source of collective experience for parents and offer the information they need. We have built up thousands of listings in our directory and we are permanently working on the site to make it as useful as possible.

Our website has targeted the US market primarily and most of the listings we have, as well as registered members and advertisers, are from America.

BFS: Why have you decided to sell a business?

VR: I have another company which takes up a lot of my time. Also we can’t provide the funding and dedication required for this great opportunity, but I don’t want the business to go to waste because we can’t develop it.

I believe ParentingInformed.com will help many parents and children and make their lives happier. Taking this into account, I have decided to sell the business to let someone else succeed in running the company.

BFS: So when did you plan your exit and how much planning has gone into the sale process?

VR: Very little actually, I didn’t really plan to sell the business. We don’t have the resources required to build the business to its full potential. When that became clear to me I immediately began the sale process.

BFS: How's it going so far?

VR: The business has been on the market for almost five months. Even though I would prefer to have sold the business by now, I take into consideration the current US economy; it is evident that buyers are not very active now, but I expect to sell the business by the end of the year.

BFS: Do you get many timewasters?

VR: I think the comparatively high asking price of $1m protects us from timewasters. I have not spent much time on discussion boards, but so far we have had a few positive inquiries through BusinessesForSale.com.

BFS: Why did you decide not to use a broker? Do you wish you had in hindsight?

VR: It’s my first time selling a business, so to be honest I didn’t know brokers existed! But even now I know, I don’t think a broker would be much help because we’re not selling a standard business.

Our business assets include a very low cash flow, developed software, search-engine recognition, invested time, and of course, ideas.

I don’t think a broker would be as enthusiastic in communicating the business’s core values. However, I would be happy to find a broker who would really understand what the business is all about and be able to communicate that well to potential buyers.

BFS: How did you value the business and who helped you?

VR: I valued the business myself. The asking price reflects the time, money and ideas already invested into the company, which means the business owner doesn’t have to start from scratch.

As a software development company we have spent a lot of time building ParentingInformed.com, including massive SEO efforts. The sale price includes software functionality, existing web content, SEO and link building.

To start a business from scratch it would take a year to develop all these aspects, and cost at least $300,000. The new owner will also need continued software development and SEO support, and our one-year support contract has a minimum value of $200,000.

This is a lucrative business opportunity and there are many competitors in this field. The future business owner will be at least two years ahead of the competition, which I believe justifies the remaining $500,000 in the sale price.

BFS: What has been the most frustrating thing about selling your business?

VR: It’s not an easy task to sell something which you have put so much of your soul and ideas into – the hardest and most frustrating for me was the decision to sell the business.

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