WES S02E04: Where Can I Find Sites To Purchase?
Continuing along with our Season 2 buyer series, today we’ll look at the various ways and places you can find sites to purchase.
We’ll cover some of the advantages and disadvantages that come with trying to find sites yourself, but we’ll also look at the various aggregators, auction sites, and brokers available.
What works for you might not necessarily work for everyone, but we’re hoping this episode will help you narrow down your search for quality websites and online businesses by pointing you in the right direction.
Having high-quality options will ensure you get a good look at the best sites available and give you a better opportunity to purchase quality sites.
If you’re digging the show and would like to show us some support, make sure to stop by iTunes and leave us a review! That’s the best way to support the show and we’d really appreciate it!
Listen To The Full Interview:
What You’ll Learn From This Episode:
1. Find Yourself!
- Can find GREAT deals
- Sometimes built with love/care
- Less competition from other buyers
- LOADS of work
- Must have a process to sort/sift
- Seller often value their sites MUCH higher than they’re actually worth!
- Deals are all in one place
- Less competition from buyers
- Wide selection?
- Not checked at all
- Not easy to quickly check/verify stats
- Ton of scams
- Quality selection of vetted/verified sites
- Great information for quick scans + due diligence
- Professionals w/ established process
- Higher prices/multiples
- They represent the seller, not you!
- “Polished turds”
- Consolidate listings from many different brokers
- Wider selection + can narrow down searches
- Similar format makes scanning better
- Not always up-to-date info
- Quality varies heavily
Featured On The Show:
- Deal Makers Weekend Las Vegas
- Empire Flippers
- Quiet Light Brokerage
- FE International
- Trusted Site Seller
- Acquisition Station
- Digital Exits
- Business For Sale
- Daltons Business
Ace: It can be really tough to determine which businesses are successful and which ones aren’t.
Speaker 2: Buying and selling businesses just got a lot easier. Welcome to the Web Equity Show, where thousands of successful entrepreneurs go to learn about buying, growing, and selling online businesses. Your hosts Justin Cooke and Ace Chapman share their real life advice examples and expert interviews to help you build and grow your own online portfolio. Now to your hosts, Justin and Ace.
Justin: Welcome to the Web Equity Show. I’m your host, Justin Cooke, and I’m here with my cohost Ace Chapman. What’s going on buddy?
Ace: What’s going on, sir? I’m great, man. Doing deals. There’s a lot of activity right now. I’m excited to jump in today’s episode.
Justin: It is a hot market, man. We’re talking season two, episode four. Today we’re looking at where can I find the sites to purchase? Who’ve already discussed whether you should build sites or buy sites. You’ve kind of decided where you’re at. Now we want to look at in the market, where can you look? What sites should you go to? Where can you find websites for sale? Where can you find these online businesses for sale? And we’re going to break down some of the advantages and disadvantages of each.
Ace: The funny thing when it comes to the advantages and disadvantages, it’s really based on you as a person, because there are a lot of methods. We’re going to be talking about working with brokers, working with marketplaces, and based on your experience, based on how much money you want to spend, and how much time you’re willing to put into the work of finding a deal, that’s going to help you determine which one of these you want to roll with.
Justin: Yeah, I think that’s a big one, Ace, is how much time you’re willing to put in. Are you willing to pay a premium to not have to spend that time? You’re really gonna have to balance that out. And again, the answer is gonna depend a bit on where your cash is at. Some of these have different price sites, too, so that’s gonna determine where you’re looking, as well. So we’re going to get into all that. Before we do, buddy, let’s do some listener love. We’ve got a five star iTunes review, man.
Justin: It’s from Brian. He says, “Another great podcast from Justin. I’ve been listening to Empire Flippers podcast for a long time, and this series is a great extension. Justin and Ace have an incredible amount of knowledge and experience in the industry. It’s amazing that they’re sharing it with us. It’s really a huge amount of value here for anyone who’s in the game of buying and selling websites.” Brian, thank you so much. We also got a mention from Andrew on Twitter, said, “Hey Justin, are you guys still coming to Ho Chi Minh City, Saigon, Vietnam this spring? Thanks for the podcasts. They are great.” Thank you Andrew, and yes, I’ll be in Saigon with the Empire Flippers team in April. We’ll be doing a workation for a month, so we’d love to meet up with you if you’re there. Hopefully we’ll get a chance to to hang out. Maybe we could do a workshop or something while we’re there, too. It’d be fun. We’re going to get you out to Saigon in April, man. What do you think?
Ace: I Know. I get so jealous of you guys. There’s so much going on in Saigon, and even where you guys are. I got to get back out. I guess last time I was out was late last year, and always have a blast when I’m in Asia, man, so I gotta get back out. In April, I’ve got the Dealmakers Weekend in Vegas, so I’m probably won’t make it out in April. But I’m thinking about maybe May, June, sometime in that timeframe, getting back out and hopping around Asia a bit.
Justin: Tell me a little bit about that, man, the Dealmakers Weekend. You need to pimp yourself a little bit. What are you doing in Vegas? What’s the deal there?
Ace: So in Vegas, we are bringing together, I’ve got past clients that have already done deals and then we have new people that are coming in, and a lot of it is around networking and helping bring people together that can help each other out and growing their business, or investors that want to invest in people’s deals. And we sit around, it’s more kind of dealmaker round table style than seminar style, and we go through case studies of different deals that are going on, things to watch out for with due diligence, and all of that good stuff, how financing is getting put together. So it’s a lot of fun. We just had one in Atlanta, had an amazing turnout, so I’m excited about Vegas.
Justin: So this is kind of a, is it a small get together? Are we talking like 20, 30 people? Are we talking a hundred people? What’s the vibe there?
Ace: Yeah, about 25 people will attend each one, and we try to keep it small, so it’s not something that we really advertise. It’s more a word of mouth, people that are hunting us down and want to get involved in the space. So we keep it small so that the relationships are a lot more close, and you’re not trying to spread yourself too thin. If you’ve ever been to any conference, it’s like, “Oh, I want to meet everybody.” So we try to go deep, and we saw even with the weekend in Atlanta, we saw deals get done over the course of those three days, and people invest in other people’s businesses, and that’s what we want to happen. You know with me, Justin, I’m a lot more interested in transactions and taking action than just sitting around and learning a bunch of stuff.
Justin: That’s cool, man. So now you’re making me jealous. I was trying to get you out to Saigon for April. It looks like I should have been in Vegas. Sounds like a fun get together. I saw a video with one of your customers, and he’s one of our customers, too. He bought I think at least one site from us. Yeah, cool man. If anyone wants to check that out, [inaudible 00:00:05:28]. What’s it called? Dealmakersweekend.com I think, right?
Ace: Yup. Dealmakersweekend.com.
Justin: All right, buddy. Let’s get into the episode. All right, buddy. So we got four main areas where we’re going to talk about how you can find sites for sale, how you can find online businesses for sale. There are four different sections. We’re going to talk, we’re gonna give some examples, we’re going to talk about the advantages and disadvantages of each. And the first one we’re going to start off with is if someone’s listening to this podcast, and they know they have a budget, they know they’re ready to go buy a website or buy an online business, and they don’t know where to look. This is probably where most people would start, right? And this is to find them, themselves. And that can be challenging, if you’re just trying to look around, and you don’t really know where to go, and you find a website. You’re like, “Oh, I think I want to buy this one. What do I do?” Right?
So we want to kind of break that down a little bit, and examples of finding a deal yourself would be looking at some of your competitors, maybe you’re already in an industry and there are some competitors that you know we’re doing a little bit more business than you, a little bit less business than you, and there might be an opportunity for you to reach out to them and see if they’re willing to sell. They could also be in communities or forums. Maybe you’re part of some kind of entrepreneurial community, some kind of website or business owner community and reaching out to them, letting them know you’re available. It could also be having a process that you’ve determined and tested through to reach out. You have particular types of sites that beat certain traffic standards and the whole thing, and you cold email them or cold call them to see if they’re willing to sell. And we’re going to talk about those a little bit.
Ace: Yeah. One of the tough things with Internet businesses is it can be really tough to determine which businesses are successful and which ones aren’t. When you’re looking at and you’re just going out cold and finding businesses for sale on your own with offline businesses, a lot of times if you’ve passed that business a few times, you know whether they’re doing well or not. You pass every day. It’s completely empty. It’s like, “Oh, maybe they’re not doing so great.” You’re passing every day, people coming out the door, it’s like, “Man, okay, they must be doing really well.”
So you can waste a lot of time when you’re searching for these deals. And some of the things that you talked about, Justin, as far as finding competitors, being in community forums, and that kind of thing, connecting with people that way at least saves you from cold approaching a lot of random sites that may not be getting any traffic or anything. So that’s one of the first things is determining if they’re getting business. One of the ways to do that is just where they rank in Google. And then one that I would add to what you talked about, Justin, is going to events and seminars. So let’s talk about some advantages and disadvantages to finding the deal yourself.
Justin: Yeah, so before getting into advantages, I’d say another thing you can do is wherever you’re at, in any community, in any seminar, if you’re talking to competitors, any of that, make it clear that you’re looking to acquire. Make it clear that you’re looking to buy businesses, make it clear that you’re looking for businesses to purchase, and you’re going to find you’ll have a lot more success with people actually bringing those ideas, bringing those businesses to you to sell. So in terms of the advantages of looking yourself and trying to find a business for sale, you can find some of the best deals this way. You’re going to have a chance to really find the diamonds in the rough. And it’s not that there aren’t good deals elsewhere, but you’re going to be able to find the deals that no one else sees, because these sites, these businesses aren’t even on the market, right? No one even has had an opportunity to look at them yet.
Ace: Yeah. That’s one of the things that makes it worth the work, because we all know the easiest thing is maybe having somebody bring a deal to you, or some of the other things we’re going to talk about like brokers. But if you’re gonna do the work, you want it to be worth doing the work of finding your own deal. If you’re going to fly out to conferences and seminars and do all of that, and it really can be, when you talk about the seminar strategy, I’ve had clients that go to conferences, and they make it known that they are looking to buy businesses, and that’s a great way to find those diamond in the rough deals that nobody else is taken a look at. It’s not going to end up in a bidding war. And really what the person is looking for is a good home and somebody that’s going to take care of the business once they sell it.
Justin: Another advantage to reaching out to sites that are just out there and available online businesses is a lot of times you can look for businesses that were built with that tender loving care, you know what I mean? The TLC touch, and these are hobby sites, these are people that are really into it, they’re into their business, and these sites weren’t built as a commodity, right? Sometimes you’ll see that with the brokers, you’ll see those in the classifieds. It’s a site that was built and it’s profitable and it works, but it’s kind of built the same as some other businesses. There’s not a lot of unique things to it, and you’re more likely to find, I think, these special unique looking businesses by reaching out to them directly. And because you’re reaching out to them directly, the other advantage would be that there’s just less competition from other buyers. They’re not getting multiple offers. You’re not having to change your offer or compete with that at all, because you’re really the only one they’re considering selling their site to.
Ace: Yeah. One of the things that I love to do is be able to sit on the same side of the negotiation table with the seller and figure out what their needs are, and the deal, and just kind of work out a win win scenario, and that becomes tough when you end up in those bidding situations.
Justin: For sure. Now all this being said, there are some serious disadvantages to trying to find these deals yourself. The first one being it can be loads of work, tons of work. And I’m specifically thinking about having a reach out process. So for example, if you’re looking for a bunch of sites for sale, and let’s say you’ve narrowed it down to 15 different targets, now you have to send them a cold email, write it up, hope they respond. If they respond, try to dig a little deeper.
You have to ask them for fairly detailed information about their business, so you’re probably gonna have to set up a call, and you can be doing all this, this is just front end work. We’re not even talking due diligence, we’re not even talking if it’s a real acquisition target for you yet. It’s just trying to see if they’d be at least open to the idea of discussing selling their business. And that’s a lot of front end work that doesn’t have a big payoff. Now if you find that diamond in the rough, of course it can be hugely valuable, and you might get a real super deal. But it’s kind of gambling with your time, right?
Ace: It is. It is. And the tough thing is, there’s no filter. So if somebody is kind of trying to pull the wool over your eyes, and you do that work and it looks really good, a lot of times you may even discover that there’s an issue before you close on the deal and take it through due diligence. But the biggest downside to that is, you just wasted all that time, that effort, that energy, and you’re starting all the way back over while you could have been looking at more deals during that time.
Justin: Yeah, Ace, I know people that do this, right? So they reach out to the sites, and a lot of times they’ll use virtual assistants to do the initial cold email until some things pop up. So they may send out a hundred emails. They get 12 responses of which three or four seem positive, and then they hop in. So Joe and I tried this with Empire Flippers, because obviously if we have a source like this for deal flow, people listing their sites [inaudible 00:13:12] marketplace, it’d be fantastically valuable. So we actually put some time and some resources into this. We didn’t just donk it together, and we put a lot of work in, and we could not make this work. And I’ve talked to other people that have, but we weren’t able to. We’re actually thinking about trying it again, because it would be survival, but we couldn’t get this one working, man.
Ace: Yeah. So it definitely can work. And I’ve seen different tactics where it does work, and one other strategy that … A lot of it does depend on your time and effort. If you’re just sitting there, you’ve got you and and a virtual assistant and a very longterm thing, you’re not looking for an instant ROI, and then you find I got a client that found a $700,000 deal that he got an amazing financing structure and all of that on, owned that one deal even if it took you a year, it makes it worth it.
But the other thing is to just go out and advertise. I’ve also got folks that have just used ad words, found some really great deals, and in some cases have actually ended up flipping that to somebody else if it wasn’t the right niche. So you’ve almost got to figure out how do I monetize the deals that are coming in that I don’t want to buy. That’s what I’m seeing with the people that are the most successful going out and finding their own deals. They are figuring out how to monetize those in other ways.
Justin: Yeah, I could see that to be valuable. It takes so much time and effort to get that one that is interesting in selling. If it’s not valuable to you, you still want to get somewhat paid on that. So if you have someone else you work with that you can pass it off to that can sell for you, hint, hint, wink, wink, I’d be happy to help you out. So another thing is, and this is kind of a smaller disadvantage, but you may find it frustrating if you’re doing this, is that a lot of times sellers value their sites much higher than they’re actually worth. And this is especially true for the hobbyist. This is especially true for the people that put a lot of TLC into the site.
And it’s like, look, it makes $2,000 a month net profit. It’s been doing that for the last couple of years or whatever. And they’re like, “Yeah, I put so much work in this. It’s got to be worth at least $300,000, right?” And you gotta be the one that tells them no, and you’re not the best person to be telling them that, right? You’re the one trying to buy the site off of them. So you’re like, “Oh, it’s not worth that much. That’s kind of a hard sell.” And it can be a little disappointing, well, really disappointing for them, and disappointing for you when you don’t get the deal.
Ace: Yes. That is probably one of the toughest things is, as soon … You even put yourself in their place. As soon as you get that email completely out of the blue from a stranger saying, “I want them to buy your business,” instantly dollar signs come in their eyes, and it’s like, “I’m about to be rich.” So you just get people, they have no idea. They’re not in this space. They’re not listening to the Web Equity Show, which they definitely should be. And they wouldn’t have an idea of what their businesses is worth. And so being the buyer and almost the appraiser, even if somebody came to buy your house, and they’re like, “All right, I’m going to appraise it, and I’m going to buy it.”
Justin: Hell no! Hell no you’re not doing that. Nope. Not happening. I’m getting a second or third opinion on that deal.
Ace: Yeah, yeah.
Justin: Absolutely. Let me ask you, Ace, so what are your thoughts on if you’re a buyer, you reach out to someone, you got someone on the hook of seems like they are interested in selling, you’ve given it a preliminary look, and you want to make an offer. Do you get the seller to offer first? I think you make the offer. This was totally cold. They don’t know who you are, you don’t know who they are. I think a cold offer to them is probably the better way to do it, because if they start off really high, you got nowhere to go from there.
Ace: Yeah. Yeah. A big part of it is before you even get to the offer, taking your time, building a relationship, almost taking them through a funnel so that they get to know who you are. You guys do that great even at Empire Flippers with having just the podcast, and a blog, and all that stuff. And quite honestly, we do that a lot with the folks in the network, and so they’re building a little bit of a relationship, they’re building some trust. You definitely want to make the first offer, though. So as you’re doing that, you get your offer out, even if it’s completely stunning them. And then you start to figure out, “Okay, well what’s most important to you to change about this offer?” And you start to work backwards to make them feel like, “Okay, he does want this to be a win win.” It’s not like, “Oh, this is what it’s going to be. Take it or leave it.”
Justin: Yeah. I haven’t devoted a ton of resources into thinking about this, but yeah, that totally makes sense. Because normally, and it’s totally counterintuitive, too, Ace, right? Because normally in a negotiation, you don’t want to be the first one to mention price. You don’t want to set the price because it’s only gonna get worse from there. Maybe you’re over promising or over quoting them, but anyone who’s listening to this show, who’s listened to the Web Equity Show, they’re going to have a really good idea on valuation. They’re gonna have a really good idea on what they’re willing to offer. And let’s say you came in on this business and you offered 12 times the net monthly profit or something.
Either they think that’s a great deal, which is hard to believe, but let’s just say they thought it was an amazing deal and they’re willing to take it. Well then obviously, that’s awesome for you, and they think it’s way lowball, well, then you can move up and make them feel special. But if they come out and they give you a hundred times monthly net profit, there’s just not really anywhere to go, because you come in at 20, 25, and you’re just going to look like an asshole.
Ace: Yes. Yeah, and this gets down to the bottom of that funnel where you’ve done a ton of work, you’ve filtered out things, you stick with things, and you get some deals that look really interesting, and it can be heartbreaking either way. Either they accept your deal and you get down line, you get into due diligence, and you realize, “Oh man, this wasn’t what they really told me.” The other thing is, you make an offer, they’re totally disgusted with you, and you never hear from him again. And then they go sell to somebody else, and you see it on the market later or whatever, because they weren’t even thinking about selling their business. So this can be a very tough process for some folks. You got to be mentally and emotionally strong to keep moving forward in spite of some of the downsides.
Justin: All right, Ace, now you’ve thoroughly depressed me. I’m moving on to the next one, man. The second thing, is you go to ecommerce.shopify.com, there’s just less buyers, so there’s gonna be less competition from other buyers. So you’re going to be able to reach out to them. Now there’s more competition than trying to find it yourself, but less than some of the other options we’re going to talk about later. One of the problems with that, though, is it’s also harder to navigate, so ecommerce.shopify.com, if you look through it like trying to read the deals, it’s kind of a pain. The third advantage obviously is there is a wide selection. So if you look at something like flippa.com, they have of anywhere I think the largest selection of available websites for sale, ranging from a couple of bucks to just a domain with a little bit of content, up to hundreds of thousands of dollars for one of the higher in websites.
Ace: Yeah. And the tough thing with that for some people is, it’s like the squirrel running through the yard, what are you focused on, and being disciplined enough not to get distracted. When you’re going into those, they’re gonna put a bunch of deals in front of you, and you can end up buying and closing on something, kind of like me buying Amazon stuff just because there’s that one click thing. I’m like one click, one click, but you can get into buyer’s mode and shopping mode with the Flippa, and I’ve seen people who know better and they go through, they bought something. They got to go outside of our process and come back later and say, “Ace, I know I shouldn’t have bought this deal. It went to zero. What was I thinking?”
Justin: It is like shopping, like you’re on Amazon, and you’re like, “Oh, I can buy that.” Yeah. These are actually two different … The platforms are so different. I’m not sure I really should’ve included them, but just from a classifieds perspective, they’re similar in that anyone can list and whatever. But ecommerce.shopify, it’s not like that at all. I can’t go through and just buy them. It’s just people posting their business and then having to go through it, so it’s kind of a hassle. Whereas Flippa, you’re right, it’s kind of like Amazon where you just go on there, you go buy something, and “Oh, I just bought myself a a website.” Right. So it can suck you in.
Ace: I’m in business.
Justin: Yeah. Some disadvantages of this. On both platforms, neither of these have the sites checked for any amount of quality. So whether its Flippa or ecommerce.shopify.com, there’s no one checking it. Basically anyone can list and sell their business there. So the quality is going to be anything from dreadful to pretty good, but you’re gonna have to get through a lot of really, really crappy sites. It’s also, specifically on the Shopify site, it’s not as easy to check and verify the stats, because they’re not very well laid out. Some of them might leave some traffic numbers, some might not. Some just put the URL, some don’t even put that. It’s really hard to see what you’re looking at, whereas Flippa’s was a lot better about that, actually. You can check and verify stats, pretty straightforward, in a very easy to read format, so they’re better.
The third disadvantage I’d say is that there are just a ton of scams, and I’d say probably more on Flippa then Shopify, you have to be really, really careful and do some real deep dives on your due diligence because Flippa just attracts the people that are looking to scam. Flippa attracts them, right? They’re just attracted to that. So it’s kind of a congregation for them. Now that’s not to say that there’s not some really good sites to be found. There are, but there’s a lot of crap, so you just gotta be really careful.
Ace: Yup, got it. You really want to treat classifieds the same way you would when we’re talking about going out and find the deal yourself. You’ve gotta be willing to filter through, walk away from a ton of deals, and find that diamond in the rough.
Justin: Yup. All right, man. Third one is brokers, right? And so there’s a bunch of brokers out there to name a few, and we’re going to put links to everything we mentioned in this podcast episode. We’re going to put it in the show notes, so if you want to link to it, you wanna check them out and be able to do that there. But some examples of brokers would be Quiet Light Brokerage. You’ve got F International, you’ve got our company, Empire Flippers, you’ve got Trusted Site Seller, you’ve got Acquisition Station, and then you’ve got Digital Exits.
So there’s a bunch of different brokers in the space. You can take a look. There are advantages and disadvantages to each one. In general, though, it’s not about a broker being great. There are better brokers than others, Ace, and I’m going to have you talk to me a little bit about this one, because I’m biased obviously. But it’s about brokers that have particularly bad deals. They’re all going to be kind of in a range, but you want to find the ones that are at the upper end of the range. And some good brokers are going to have bad deals for you, and so you always have to be mindful of that.
Ace: Yeah, I think with all of this, it’s up to you to take care of yourself. Once you decide that you’re going to buy a business, you’re out of the realm of the government doing a bunch of work to protect you. Having some organization like the SEC that’s monitoring brokers or anything in this space. And basically the government stance is, unlike buying a house or buying a stock or anything like that, if you decide that you want to buy a business, you are a big boy. You fall under the same laws as Warren Buffet. Warren Buffet can take care of himself. So you gotta be able to take care of yourself. And so we really treat every deal the same. We’ve dealt with every broker that we’ve got listed here, and each broker’s great to deal with, but it doesn’t mean that you’re going out and blindly buying deals from any broker or taking what the broker says as the gospel because they’re salespeople. They’re salespeople.
So some of the advantages of dealing with a brokers is, they are going to have a lot more quality selection. So they’re going to be vetted deals, they verified the sites, there’s just a lot less crap. So it doesn’t mean that the business is necessarily going to do great in the future or whatever. You’ve got to be the person to determine that. And we still do the same amount of due diligence regardless of if it’s a deal we’ve found, the classified, the broker, we’re still taking it through that same due diligence process, as much as I have great relationships with each of the brokers. The other great advantage though is you’re at least getting the information really quickly.
Justin: Yeah, they normally lay it out in a nice … They have like a listing format, or they have a prospectus, or they have some way of delivering you the information that’s normally the same on their site. Maybe it varies broker to broker, but they have a nice way of displaying information for you to quickly scan it and determine whether that’s a good fit, right?
Ace: Exactly. So that makes it a lot easier to look at a lot of deals, get all the information, start to take them through your due diligence process, and figure out what deal is the best for you. And then the last advantage is, they’re professionals, and they’ve got a process. You’re able to contact them and ask questions, jump on the call with the seller, and everything’s just a little bit easier and quicker.
Justin: So you had more experience buying from brokers than I do. We’ve done plenty of business together, but I know you’ve done business with other brokers too. How do you determine whether a broker is better or not? How do you determine the types of broker you do want to work with and the ones you don’t want to work with? How do you do that? You don’t have to name any names of the bad ones, whatever, but give us some idea on how that works.
Ace: Yeah, so over the years you just build a lot of history and statistics looking at the deals, and it’s basically just a percentage where we know out of a hundred deals or out of 10 deals, three out of 10 are going to be complete scams, you know what I mean? And if you start to see that over and over, it’s like, “Man, this guy has a bunch of scams,” or if you’re in a deal and if you’ve made offers on 10 deals, and you get through due diligence and only one makes it past due diligence, it becomes a thing where it’s like, okay, we don’t want to deal as much with this broker, just because the source tends to make us do a lot more work. We might as well go out and just do those on a bunch of deals we find ourselves.
But we’ve got to do all that work, just like we were talking about what finding your own deal, get to the end. You didn’t really tell us up front things that you should have, and now we did all this work only to realize that there’s this issue. And it’s going to happen with every broker. That kind of thing you want to be prepared for. You guys are amazing, but we’ve gotten into deals and realized that, oh man, there’s this issue or whatever. And you guys are very forthcoming as we find those things. But there are definitely other brokers that just straight up will try to hot things, and the the first time, it’s like, okay, cool. The second time. And then when you just see that it is there, it’s a part of their process. It’s like, okay, we’re going to kind of put you to the back burner and we don’t look at as much deals from those folks.
Justin: Yeah. So I think that’s important, that you’re dealing with pros that have a generally good way of vetting and verifying their listings and making sure they’re quality, right? So that’s important. Is there anything with process that you look at, or is it like you’ll work with anyone’s process, it’s more about the deal?
Ace: It is more about the deal because it’s definitely … If you’re going out and you look for deals on your own, no matter how difficult a process is, if somebody is really doing that work to prevet the deal, and verify the stats are real, and all that stuff, we can deal with the process. And the one thing that is frustrating or can be tough is, as we’re dealing with a broker, just having the speed and access to information. So if we’re asking questions and it takes a really long time to get back and and that kind of thing. Or you’re dealing with folks that have listed a deal and then on a regular basis their sellers are backing out and decided not to sell. We’ve seen that quite a bit. A lot of times what that means is that there’s not a lot of clear communication going on, on the other side.
Justin: Yeah. On the broker to the seller. They’re not keeping them updated. They’re not getting updates from them. That’s interesting. I see that. Okay.
Ace: Yeah. Yeah.
Justin: That’s actually helpful for me, Ace. It’s like I’m talking to my customer here, I get some good feedback.
Ace: Yeah. It was like a little consulting.
Justin: That’s fine. Good.
Ace: So yeah, those are some of the things that still, even as we’re talking about this, this is a lot of the things that still mean that it’s work dealing with a broker, you’re not just opting out of, “Okay, well great. I don’t want to do any of that other work. I’m just going to get a deal from a broker.” It doesn’t work that way.
Justin: I think you hammered that home. But again, due diligence is always your responsibility. I don’t care if they vet the site. You still have to do your own due diligence. In one of our future episodes, we’re going to go into reviewing deals overall and then a deep dive on due diligence as well. So we’re going to cover that for you. Let’s talk about some of the disadvantages of the brokers. The first one is pretty clear. They’re going to have higher prices, right? They’re going to use bigger multiples, and they do this for a bunch of reasons. They need to make money, right? So they’re getting some margin on the DL, but also because they put a lot of time into vetting those deals and the work that they have to do, so they have to get paid back for their time and then attach a profit to that as well.
So even though you’re getting the information presented really clearly, really plainly, and it helps you save time, they want to get paid for that time that you save, and so you’re going to pay more. They also represent the seller, right? Ultimately they’re a representative of the seller. Now we’ve talked in other podcasts, we’re gonna talk about this more when we talk about deal making, how to get the broker working for you. And I think there’s some really interesting things you can do to make that happen to where even though they represent the seller, they’re kind of on your side. So there’s some things you can do.
And the third disadvantage is you have the polished turds problem, right? So it’s pretty easy to see a turd when it’s on a classified or whatever. It’s kind of there. They give you a little bit of information. You’re like, oh nope, not doing that. Oh no, not doing that deal. But with a broker, the problem is, is if they’re selling turds, they polish them up, they get them all nice and clean, and they’ve got great stats, and a great prospectus, and all this information, and they can make these kind of scammy or sketchy sites look really nice, right? Make them look really attractive.
Ace: Yeah, yeah, that’s the really tough thing. And a lot of times I’ll harp on people really doing the work, because they’re great at branding a deal. Their job is to sell, and so sometimes you can find yourself looking at something that’s like a shiny turd, and if you don’t dig in, you could end up owning that shiny turd.
Justin: Yeah. Not so hot. A fourth one we want to look at, aside from brokers, we’re now looking at looking at the aggregators, and to explain what an aggregator is, basically it’s taking a bunch of brokers’ listings, a bunch of brokers have agreed to republish their listings, or their sites, or businesses for sale. Three is aggregators, and there’s a bunch of them. I think the biggest and clearest example of this would be BizBuySell. I know that us, I know that Quiet Light, I know that F International, we all are republished deals that are maybe digital exits as well, but we all have some of our sites that are on our brokerages, we have them on BizBuySell. Their sister company is BizQuest. There’s another one, [Centurika’s 00:33:28] Market Watch, and you can actually sort by broker there. There’s businessesforsale.com, and there’s daltonsbusiness.com as well.
So there’s a bunch of these types of aggregators, and some of the advantages of going through an aggregator is that they consolidate a lot of the listings from a bunch of different brokers. So instead of having to go to Empire Flippers, Marketplace, having to go to FE, having to go to Digital Exits, you can just go to one place, and with that you’re going to get a wider selection, and you can actually narrow down those searches a bit better, because they have fairly detailed search options that allow, if you’re very specific in the type of niche do you want to go for, you have a very specific kind of price point, you can really narrow it down with the aggregator.
Ace: Yeah, that’s really what I use those for. I wouldn’t say it’s as much a different sources, just making it easier to go out and see where everything is so you get that wider selection. You can narrow down the search. You can be pulling everything into the aggregator, and it makes it an easy process to kind of scan through the deals from the different brokers.
Justin: Yeah, there’s a bunch of our brokers that go there, and you get used to a format, right? They all have a similar format that makes it a lot better. What do you normally use, Ace? Do you go to our marketplace and dig through the deals? Do you, when you’re just kind of scanning, let’s say you want to take an hour and check out what deals are available. Do you go broker to broker, site to site? Do you use the aggregators? What do you do?
Speaker 4: So personally me, I give the clients access, I tell them about all of these resources, and then I actually spend most of my time looking at the prospectuses that they’ve already filtered through. So I haven’t been to the Market Watch or directly on a site in a while. So I would be curious even from my clients to see what they’re finding to be the easiest. But most of the time I’m seeing the deal at the prospectus.
Justin: Gotcha. All right, so let’s talk about some of the disadvantages of the aggregators, and they do have some. I made it sound pretty. They got all the broker’s listings, you go there, they’ve got great search, but one of the problems is that the information is not always up to date. And this is from the sellers and from the brokers. Individual sellers can go to BizBuySell, for example, and they can list their business there, and then they can forget about it, and not come back, and leave it up there, and you try to reach out to them and they don’t get back to you.
The same thing with brokers, though. So they’ll list on BizBuySell, and it sold weeks or months ago, and it’s still listed for sale on BizBuySell, or your reach out to them and, “Oh, yeah, sold it last week. Sorry.” So you’ll get some of those. That can be a bit of a pain. You’ll also, just like everything else, the quality can vary heavily, because there are a bunch of different brokers on there with a bunch of different sites. They can go anything from kind of crappy sites to fantastic sites. Maybe not in your niche, but a fantastic site is an excellent site. So the quality is going to vary pretty heavily.
Ace: Yes, that is the biggest thing that you’ll start to realize as you look at those deals is, number one, there are a ton of deals that are either under contract, they sold months ago, the seller pulled the listing like we talked about a second ago, and that can be a headache here. And then the other thing is that the quality does vary. There aren’t standards in the industry where it’s like, hey, here are the only things that really are going to be listed or put up or advertised. And a lot of times individual sites will come through on these aggregators where just a seller is selling their own business. So you’ve still got to go through the process.
Justin: You can miss out on deals, too. So for example, right now, in fact right now, we’re just having some emails back and forth, but Centurica’s Market Watch, which is generally really good, there’s a problem with their API or with our feed or something, so they don’t have any listings from us. So if you’re going through there, you kind of like our sites when you’re looking at that, and you wouldn’t have seen any of ours for a while. So there might’ve been some deals that could have passed you up. We’ve had a ton of listings.
It’s the same thing with Market Watch, with BizBuySell, Biz Cross, all you all the same thing. Maybe that broker just hasn’t posted in the up for a while, and you’re missing out on some of the deals that they have going. So yeah, in general I like the aggregators. I think they’re pretty helpful, but just know that the data may be old or not working at the time. All right, man, let’s do a quick wrap up on the overall four places we looked at. In general, I’d say that the highest quality sites are going to be with brokers or they’re going to be found privately in the first one we talked about, but you’re going to get the widest selection of available sites through classifieds and through aggregators. Does that sounds about right?
Ace: That is correct. I’d say that when you’re looking at those classifieds and aggregators, a good way to use those I meant to mention earlier is to figure out what kind of deal you’re interested in, see all the different business models out there. It’s an opportunity to really educate yourself, because you’d have that wide selection.
Justin: The other thing is, I mentioned earlier in the show, if you’re on the market to buy a site or a business, be vocal about it. Tell your peers, tell your competitors, let people know you’ve got the money, and you are looking to buy. That’s a great way for people in your network or in your niche or in your industry to be comfortable reaching out to you about potentially selling you their business. And I think by just by being vocal about, getting the word out there, letting people know, you’re going to have a better chance of those deals falling on your lap.
The other thing, the last thing I’ll mention is that especially if you’re finding deals on your own, you’re going to have to have a really good process refining those off market sites. And if anyone has that and you’re a listener to this podcast, you have a great process for finding those untapped sites to purchase, let us know. I’d love to hear from you. I’d love to hear what you’re doing, and that’d be really interesting to me, because that’s something we’ve been working on. All right, man. Is that it for the show?
Ace: I think that is it for this episode.
Justin: All right, man. We’ll be on next week.
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