5 Lessons From 7 Figure Exit & More [AMA]

[blackwar85]

Hello BuSo,

As promised over here https://www.buildersociety.com/threads/buso-am-i-getting-screwed-on-a-7-figure-deal.5576/ when I finished the selling process I will talk more about what I have learned about exiting the business.

I think plenty of people like @MrMedia , @stackcash , @Tavin have shared great business-building tips on their own exit threads so I will primarily focus on the selling itself rather than building the website, SEO, content, etc.

I aim to help everyone understand exiting a business of this size so when the time comes, you can be better prepared and get the maximum dollars.

1. Ask around for valuations and broker's fee​

Get estimated sales price ( or price range ) and broker's fee information from as many brokers or marketplaces as possible even if you know who you want to sell with. This helps you negotiate a higher listing price or lower commission % with the broker you want to sell.

Don't necessarily go with the broker that promises the highest sale price or lowest broker's fee. The goal of getting multiple offers is to negotiate better terms with the broker you trust and want to sell with.

2. Put effort into getting an accurate estimation of the sales price​

For an initial valuation, compile and send brokers your own P&L and make it accurate as possible to prevent any surprises later on. If you don't report correct revenue or expense numbers on your initial valuation you can be in for a bad surprise later on.

It's because the brokers will do the in-depth financial and operational due diligence only after you have signed to sell with them.

Here are some additional things to keep an eye on:

- All the business expenses you made in 6 to 12 months, depending on the valuation period, are factored into the valuation. When 5 months out of 6 your operating expenses have been $100/month, but in the 6th month you spent $20,000 on new links and content to grow the website, the average for the valuation period would still be $20,500/6=$3416/month.

- Don't expect the valuation to be updated monthly. When I sold my low 6 figure site my website listing price got updated monthly according to last month's performance. With the 7-figure site, there are no monthly valuation updates.

3. How much will your website really sell for?​

Ok, so you have prepared your own P&L, gotten an idea of sale prices and broker's fees, what's next? Here are some aspects to take into account:

- Make sure the listing price has a negotiation room in it. Generally, you can expect to get around 90% of the listing price after the negotiations. So, make sure there is a 10% buffer between the price you want to get vs what the website is listed for. Good brokers add the negotiation buffer themselves.

- Unfortunately, even 90% of the listing price usually involves a payout structure. There can be many structures, but I would set my expectations to something like 70% upfront and then 20-30% after a year if the site maintains 80% of its revenue. The key thing here is to be prepared that if you want to get 90-100% of your listing price then there is likely to be some sort of a structure.

- There are also cash buyers. Since cash is premium to earn-out I would set my expectations to around 80% of the full listing price. They may start very low like 60% cash and then go up after time.

These expectations are more towards a below-average to average scenario. For example, I got a full listing price in cash for my website and I also had an offer over the listing price that involved earn-out.

4. What to know about the sales & negotiation process​

Broker's goal is to sell your business as quickly and with the least amount of effort as possible. I noticed they are relatively risk-averse and will not fight for every $100,000 like you will. They will gladly sacrifice $100,000 in a 7 figure deal when it increases the chances that your website will successfully sell.

- They can direct you towards cash buyers who can close fast.
- They may want to secure a good deal for a very large buyer ( P/E fund ) in hopes of doing repeat business.
- They are not interested in waiting for the perfect buyer and instead nudge you to accept or negotiate offers on the table.

This means you want to take all the advice they give you with a grain of salt, especially when it comes to counter-offers and cash vs earn-out. Be aware of how they frame situations and also commitment-consistency bias. Once you make a statement to a broker or buyer it's really hard to backtrack and keep good faith.

For example, during the negotiation, the broker may ask you what are you realistically hoping to sell the business for? If you say that 85% of the listing price will do, then that's going to be it.

If the broker understands you really are trying to get the 90-100% of listing price, their perspective also changes and they understand they need to put in the work with the buyers to get them to that level. I found that a lot of buyers know very little about digital assets. Brokers are their source for where the market is heading and determining a good deal.

The broker had 2-3 calls with each serious buyer while I only had one buyer-seller call with each.

During buyer-seller calls, you should stay sharp without being overly tight or tense. Each buyer was completely different. There seem to be no universal rules or guidelines. I emphasized different points and made sure what I said matched the buyer's perspective and style.

5. Timeline and how it affects your business​

The process took about 5 months from the due diligence to signing the APA. The website performance prior to due diligence will determine your site valuation so you will probably stop cutting expenses at least 6 months before listing a website.

So it's almost a period of 1 year during which:
1. You cannot actively scale/grow the website to the extent of your funds. This is to keep expenses down and get a better valuation.
2. You are very vulnerable to Google updates or even fluctuations because if you get hit it affects your valuation or scares away the buyers.
3. When you get hit by Google you may be motivated to do quick fixes instead of putting in a proper amount of time and money to bring back the site. This puts you into a scarcity and desperation mindset which is bad for negotiations.

How to solve the problems?
1. Be mindful of how much it really takes to maintain the website and its earnings. Your sites are not completely passive and will probably not do fine 6+ months without any links or content. Be active. Build links and add content at least 8-9 months out of the 11. Yes, it will affect your valuation a bit, but it will save your nerves and increase the chances of a successful exit.

By working on your business as long as possible you will have a better chance of ensuring that the site will do well in the new owner's hands and secure you a full earn-out. You can also request the new owners to keep up the last 6-month expenditure levels for the earn-out year, which also increases your chance of a full payout.

2. By continuing to invest in a business throughout the sale process you will also prepare yourself for the scenario where there are no satisfying offers on the table and decide not to sell. This gives you the self-confidence to wait for the price you really want and not succumb to the broker or buyers. Or to emotions like fear.

-----

I hope the above points give you some food for thought, encourage you to research, ask questions and give you a little more confidence when exiting a 7-figure deal one day.

Now that the main topic is covered here are some details about the site I sold:
- The site can be categorized as an Amazon affiliate site. I followed the standard format of these sites, but I did everything a little bit better.
- I created the business around 4 years ago.
- The website sale plus the revenues earned throughout the years netted me multiple millions of dollars.
- It was my third exit. The first one was 4 figures where I almost got scammed - https://www.buildersociety.com/threads/flippa-sale-no-website-and-no-money.1129/#post-11668. The second one was six figures.

For some time I'm open to all the questions regarding the sales process and also overall growth strategies of SEO websites. Would be really useful if some other members would also share some tidbits about selling larger sites.

 

[MrMedia]

Congrats on the exit. Well deserved. I will give you some advice.

As you are posting this on a public forum beware of people who will now approach you with “business opportunities”

They know you have cash on hand and will use their reputation to convince you to partner with them - ie. “invest” in them.

This is exactly what happened me and I am one week away from posting a full case study on what happened.

The person in question is very well known and most people will be shocked but I am hoping that I don’t have to do this.

So congrats again and be careful with people who approach you now people know you have the funds.

 

[secretagentdad]

Drama drama drama. Dunno why it’s in this thread but I’m a llama. Subbed lol, better update us.
Prolly good advice for everyone on here though. Some people on here are real wackadoodles.


For op.

Thanks for the ama. Feel free to just cherry pick the line items you feel like addressing.
Sorry its mostly content process questions. I'm hung up on those right now.

To clarify are we talking largely organic traffic driven sites ?

Got any more details on your traffic break downs for these?

How do you manage your writers, what kinda payment terms do you use for most content?

What kind of editorial processes have you tried?

How much content did you put into these projects?

What was your best investment or worst content investment you feel like talking about?

Any thoughts or pointers for implementing amazon for max conversions you picked up over these projects?

Have the commission cuts affected your sites much?

Kinda a weird one.
Do you have any musings and or comments about a hypothetical universe where you used Adsense instead of amazon for monitization? How do you think it would have effected your revenue. Ever do any testing ?

 

[Darth]

Great post. Would definitely be interested in more info on some of the stuff secretagentdad pointed to.

The person in question is very well known and most people will be shocked but I am hoping that I don’t have to do this.

Sounds like you need to do it regardless now.

 

[blackwar85]

Thanks for the ama. Feel free to just cherry pick the line items you feel like addressing.
Sorry its mostly content process questions. I'm hung up on those right now.

Since your questions are the first ones I have plenty of energy to answer all of them.

To clarify are we talking largely organic traffic driven sites ?

Yes, organic accounted for like 90% of the traffic.

Got any more details on your traffic break downs for these?

90% organic and the rest were direct or referral.

How do you manage your writers, what kinda payment terms do you use for most content?

Upwork has worked for me. I have like 8-12 writers who are all experts in different topics in my niche. I like to be able to choose and not rely on one or two writers. I usually pay them per project. Milestones are usually $500-1000 and payment usually falls between $4-6 per 100 words. I also sometimes get discounts due to the volume of content I order.

What kind of editorial processes have you tried?

I do keyword research and fill out a blank template I have for every content type ( buyer guide, review, article ) that contains writing instructions. Then I send it to the writer for their feedback on the template and how much information there is to cover on the topic etc.

After the writer confirms everything I will also send them the general style & writing guidelines and they get to work.

Once I get the article it goes to a proofreader and then it goes to the content manager/formatter who will upload the article to WP and add images, affiliate links, etc.

How much content did you put into these projects?

The 7-figure project had like 400-500 content pieces. 200 pages of that were "money content"

What was your best investment or worst content investment you feel like talking about?

Tough to say, because in SEO you rarely know what investment exactly produced the result. However, I would highlight the linkbait content I created. If you have solid evergreen linkbait content it's very easy to do outreach or hire someone to do outreach. My site had over 500+ quality outreach links from a variety of sources as tourist websites like visitphoenix.com, large U.S non-profit organizations, and dozens of small clubs/foundations that were very relevant to my niche.

Any thoughts or pointers for implementing amazon for max conversions you picked up over these projects?

Having a copywriter research your niche and work on improving intros, sub-headings, persuasion words, paragraph length, and flow can bring a massive difference to CR%.

Have the commission cuts affected your sites much?

Amazon commission cuts were one of the few things I did not account for in my pre-mortem when I started the project. Basically, I went from 7-8% ( whatever the exact volume was ), to 4.5% and 3% over the years.

I got a lucky break in 2019 when I got an Amazon custom rate card which was very similar to the volume-based rates Amazon used to have. So 2019 - 2020 beginning I earned 7-8% in Amazon when the standard in my niche was 4.5%. The extra money was huge in helping me to scale.

When I was relegated from Amazon custom rate card in 2020 back to the standard commission rate the site was large enough to aggressively scale traffic so I would make up for the lower commission %.

Kinda a weird one.
Do you have any musings and or comments about a hypothetical universe where you used Adsense instead of amazon for monitization? How do you think it would have effected your revenue. Ever do any testing ?

Yes, I did. Adsense did not work well. A major part of it was probably that I did not put full effort into testing different placements, conversion optimization techniques etc. When I tested Adsense I don't remember it having auto-optimization like Ezoic etc.

I have heard good things about auto-optimization ad networks so I wanted to test them out, but I never got to it.

 

[matora97]

Congrats on your exit.

I would like to know if you could possibly expand on how you choose your niches (what do you look at, do you build specific pages at the start to build topical relevance around your niche, etc.)

 

[blackwar85]

Congrats on your exit.

I would like to know if you could possibly expand on how you choose your niches (what do you look at, do you build specific pages at the start to build topical relevance around your niche, etc.)

For me, the niche choice was a natural progression. I started getting into online marketing when I had like $500 to work with so I decided to choose a sub-niche of large vertical to have a chance of success. I chose the sub-niche that wasn't too difficult for me to write articles on and products had a decent cost of $300-500.

I flipped the first site for 4/5 figures and almost got scammed which is now a very funny story - https://www.buildersociety.com/threads/flippa-sale-no-website-and-no-money.1129/#post-11668

Then I invested the exit money and built a website in a little bigger niche of the same vertical. I found the niche by spying on the websites listed on various marketplaces. I sold that too after a while.

After the two exits, I knew the vertical, its competition, and revenue potential well enough to launch a new site that would dominate the entire vertical.

I believe you can make money in whatever niche you are currently in. You just need to determine how large of a piece you can successfully tackle ( sub-niche, niche, or the whole vertical ) based on your own skill-set and available funds.

Now, for my next niches, I know that I will not count on Amazon. The margins ( EPC vs cost of links and content ) are way too tight for the profits I seek. I would look into a combination of affiliate offers ( majority non-Amazon so I can negotiate and work with them ), display ads, lead generation, deals with product owners, etc.

 

[MrMedia]

What are your plans for the future - are you going to YOLO the cash into BTC or start new websites?

 

[blackwar85]

What are your plans for the future - are you going to YOLO the cash into BTC or start new websites?

I'm not really a YOLO or bitcoin kind of a guy, so I will invest in index funds, real estate, or maybe online businesses instead.

Work-wise I would like to change things up and try to work for some startups/interesting companies to get new experiences and then create another business down the road at some point.

 

[Ryuzaki]

Did you see, or have you seen, many different earn out structures? I'm interested in the different milestones and percentages and how much risk buyers are asking you to assume on their behalf (after you already assumed all of the risk from day one).

I see you want to work in different arenas and try different things. Do you have a plan to build a permanent team (even if simply VA-levels) to maybe create and grow another (or 2-3 more) sites for you to flip on down the line? I'm finding these days that once you have a formula down, SEO becomes a not-so-difficult thing. Just one of putting in the labor and the time and being patient.

 

[Stones]

First of all thanks for taking the time to do this @blackwar85, after the amount of interest in @MrMedia 's thread, I'm sure this one will be popular too.

A couple of questions in no particular order.

How did the use of 301s affect the pricing / valuation of the site. Did you build on a dropped/aged domain and if yes, how did the buyer/broker see these links?

Looking back on the sale, were there any things that you think would have been beneficial when you started the site/business. Perhaps accounting, trademarks etc.

It seems you had processes for outreach and link building, were these processes a part of the sale?

 

[proto]

If you can start again from the beginning would you have done anything different to speed up the growth of the website?

 

[blackwar85]

Did you see, or have you see, many different earn out structures? I'm interested in the different milestones and percentages and how much risk buyers are asking you to assume on their behalf (after you already assumed all of the risk from day one).

My earn-out experience has been from the 2 earn-out offers I have received and conversations with brokers when the website was listed for sale.

There are also a variety of different structures, the most popular seems to be an earn-out, but there is also a seller's note.

Regarding the milestones and percentages. The broker set my expectations around 70% upfront cash ( from the listing price ) and then possibly another 20-30% percent if the site continues to make more than 80% of its valuation period earnings over the next 1 year.

From the offers I got, the percentages of 70% upfront and 20-30% stayed true. But the conditions on which the earn-out will be paid were more flexible. The precise earn-out size was linked to how much revenue the website earned under new owners for one year.

For an example:

If under the new owner's the site earned under 70% of its valuation period earnings then the earn-out would be 0. If the site earned 70-100% then there was a corresponding earn-out. Only if the site earned 100% of its earnings then I would get a full payout.

I found that some buyers had really smart structures. Sometimes offering to pay you even 10-20% over listing price on the earn-out condition that your site will perform better under them than it performed under you.

However, don't get caught up in specific percentages or scenarios of others, but instead:
1. Ask the broker what earn-out structures or cash payments other similar affiliate sites have been sold for in 6 months. Try to get as specific information as possible.
2. With the general % I laid out plus the broker's feedback, think ahead of what offers you are likely to get and how it affects your exit strategy. If you decide you will want to have earn-out then maybe invest more into your site or have a growth strategy for new owners. If cash then you don't have to worry about the site after the sale, but you may not get close to the listing price.

I see you want to work in different arenas and try different things. Do you have a plan to build a permanent team (even if simply VA-levels) to maybe create and grow another (or 2-3 more) sites for you to flip on down the line? I'm finding these days that once you have a formula down, SEO becomes a not-so-difficult thing. Just one of putting in the labor and the time and being patient.

Everything you said is true. It is easier to launch new sites because I have more funds available and have positive feedback loops from my previous successes.

However, none of that really means anything if I don't have the heart and will to go through the process again. I'm not interested in creating affiliate sites anymore. It was a fun challenge, but I would like to try and move on to something else.

First of all thanks for taking the time to do this @blackwar85, after the amount of interest in @MrMedia 's thread, I'm sure this one will be popular too.

A couple of questions in no particular order.

How did the use of 301s affect the pricing / valuation of the site. Did you build on a dropped/aged domain and if yes, how did the buyer/broker see these links?

Looking back on the sale, were there any things that you think would have been beneficial when you started the site/business. Perhaps accounting, trademarks etc.

It seems you had processes for outreach and link building, were these processes a part of the sale?

I did not use any 301 redirects, but I used dropped/aged domain. The dropped/aged domain factor was never mentioned in the conversations with brokers or buyers.

Not really. I already had an official company registered so from the very start I had an accountant to keep financial statements in check.

No one ever asked for systems or processes. As mentioned in my first post, the questions I got from the buyers were very basic. They were less interested in the in's and out's of business, but rather the overall growth trajectory, profit margins, fluctuations of traffic & revenue, legal aspects, etc. The broker handled such questions.

If you can start again from the beginning would you have done anything different to speed up the growth of the website?

Tough to say. For the first 1-1.5 years, I was only doing outreach, white-hat link building for the website which built a great foundation but did not really impact traffic & revenue that much.

Only when I started actively acquiring links to specific money pages with exact match anchors I saw real growth start happening.

However, the white-hat foundation I built might have saved me from Google penalties.

Starting over I would probably start more aggressive SEO earlier on, but I can't say for sure.

 

[JamaicanMoose]

Really good post. Congratulations on your exit.

To anyone who hasn't sold a 6 figure + site before, please pay attention to his 5th point - Timeline. Prepare for your exit 9+ months in advance. Frontload expenses that will help your business scale. When you're 4-6 months away from listing, take your foot off the pedal, but continue working on the site.

The last thing you want is for the site to go into a decline right after you list because you decided to save say $2,000~ in maintenance expenses. I learned that one the hard way with my first 6-figure exit. Not a fun spot to be in.

Just to put the above example $2,000 maintenance expenses in context. $2,000 / 6 months = $333/mo average * 33x valuation = reduction in listing price of $11,000. If you're selling the site for $300,000, after negotiations, fees, and taxes, the net difference on a $300,000 sale and $289,000 sale is minimal. Who gives a shit if you have to spend a little to get that big of a payout.

His point about also shopping around to different brokers is true. It may not always be worth going with the one who gives you the highest listing price. Empire Flippers is giving very high multiples right now when every other broker seems to be decreasing them. Empire Flippers sells 75% of their listings. FE International sells 94.1% of their listings. Is the higher listing multiple worth the reduction in % close rate? A lot can happen while you wait for your business to sell (Google updates, Amazon fee changes). After several 6 figure exits, I'm now more conservative and usually take the higher sale % chance at a slightly less multiple, but your risk tolerance may be higher.

Anyways, congrats again, OP.

 

[Ryuzaki]

Tough to say. For the first 1-1.5 years, I was only doing outreach, white-hat link building for the website which built a great foundation but did not really impact traffic & revenue that much.

Only when I started actively acquiring links to specific money pages with exact match anchors I saw real growth start happening.

However, the white-hat foundation I built might have saved me from Google penalties.

Starting over I would probably start more aggressive SEO earlier on, but I can't say for sure.

If you don't mind, I'd like to expand on this from my viewpoint.

I think the first 1 to 1.5 years are going to be slow going regardless. I've said it before, even with aged/linked domains, when you start out you need to firing on all cylinders, getting as much done in the first few months as possible and keeping steady production going from month 3 - 6 and onward.

It's all of that work that gives you no immediate return that pays off like crazy once Google says "we trust this site and it has topical authority for it's niche". And then it's all the "steady production" work from the first year that continues to mature and cause growth in year 2 and onward. And if you never stop the steady production, you'll keep growing.

As a crude example, let's say you stop working on the site between month 6 and 12. At month 12 you may experience a burst in growth that then plateaus in month 18 through 24. That plateau corresponds to the lack of production during month 6 to 12. Everything is delayed in this game so keeping the conveyor belt churning is big time important.

After all that, once you have trust, authority, and definitely topical authority, you can start sniping rankings like @blackwar85 is saying. You can produce "money articles" and hit them with the right links, and immediately start reaping the benefit. It's getting to this stage that few achieve, but it's where you can get real strategic and start printing money.

For big authority site style content sites focused on SEO, the first 1 to 1.5 years is really about covering all the ground you need so that Google trusts you for your topic. THEN it becomes a strategic game of sniping specific targets.

My ultimate point is, being aggressive early on (mainly in terms of trying to attack specific keywords) can be a distraction and loss of ROI. Early = spread your wings and cover ground. Late = easy strategic sniping.

That white-hat foundation is vastly important in terms of covering ground. The more referring domains, the better. Doesn't really matter where they're aimed at the start. You just want page rank flowing all through the site. This ends up giving you a lot of data later so you know where the strategy lies. You gotta cover ground to get the data and to get the trust, so you might as well do that early on when you don't have data or trust or much response from Google.

Great post, thanks for letting me expand on it and give my view. Thanks for the thread and answers.

 

[Samwise89]

What can you tell us about the content formatters:

• How complex were your articles?
• How long did it take them to post each one on average?
• Did you pay them hourly or by task?
• Did you find that, even with your SOPs, that they made mistakes?
• How much time did you spend doing quality assurance?
• Or did you pay someone to do that as well?

Thanks, and congrats!

 

[CaptainHustle]

Thank you so much for the AMA. So much golden information in this thread.

I’m a little late to this but what was your whitehat outreach strategy like?

- Was it skyscraper or guest posts or some other method?
- How would you go about creating a linkable asset if that is an appro
- Any tools, services you recommend for doing this?
- Did you ever try offering cash when the initial mail was not responded to?
- How would you filter sites for outreaching?

Thanks again for doing this AMA.

 

[enivid]

Thanks for the AMA, if you don't mind, what multiple was your website valued at?

 

[blackwar85]

What can you tell us about the content formatters:

• How complex were your articles?

Buyer guides were 3000-6000 words, reviews about 1000, and regular articles 1000-2000 words.

• How long did it take them to post each one on average?

Usually 10 hours for a large buyer guide.

• Did you pay them hourly or by task?

Hourly.

• Did you find that, even with your SOPs, that they made mistakes?

Yes, small mistakes came up from time to time in the beginning. Most of the mistakes were subjective like image choice etc or not clear enough instructions.

• How much time did you spend doing quality assurance?

About fifteen minutes to half an hour for every buyer guide published.

Thank you so much for the AMA. So much golden information in this thread.

I’m a little late to this but what was your whitehat outreach strategy like?

- Was it skyscraper or guest posts or some other method?

The main strategy was publishing linkbait content and having a specific plan on how to promote it.

- How would you go about creating a linkable asset if that is an appro

Create an article that serves a specific niche or underappreciated audience. Tie the topic to your niche and then make sure you have enough potential prospects to outreach to.

- Any tools, services you recommend for doing this?

I only used link prospector, e-mail finder, and then outreach tools like Mailshake.

- Did you ever try offering cash when the initial mail was not responded to?

I never offered cash but many webmasters requested cash.

- How would you filter sites for outreaching?

Link prospector or play around with google search operators and then order Fiverr scrape.

Thanks for the AMA, if you don't mind, what multiple was your website valued at?

Mid-thirties.

 

[janky]

The main strategy was publishing linkbait content and having a specific plan on how to promote it.

Create an article that serves a specific niche or underappreciated audience. Tie the topic to your niche and then make sure you have enough potential prospects to outreach to.

Can you share anything about how you do this? Where can I learn about this? Is anyone teaching how to do this properly? Any site from where I could "learn" how to do it? Or any examples of proper linkbait article?

You said you did outreach for 1-1.5 years. Can you share anything about the outreach process (yes, I read your reply above)? Especially how you got free links. Or was it just a numbers game after the linkbait content was out there?

I would really really really appreciate if you could share more about these topics/processes. I'm at the level where I can find decent niches and can rank them, but I know if I wouldn't order all my links from marketplaces, I would be 3-5x more profitable.

Thanks for this thread, really valuable info.

 

[blackwar85]

Citationlabs.com has a lot of great information on outreach & linkbait.

It was a numbers game after linkbaits are published. I sent about 10,000 outreach messages during the first 1-1.5 years which netted me around 400 niche relevant links.

 

[secretagentdad]

Citationlabs.com has a lot of great information on outreach & linkbait.

It was a numbers game after linkbaits are published. I sent about 10,000 outreach messages during the first 1-1.5 years which netted me around 400 niche relevant links.

Get any links or citations with out reaching out?

Thoughts on Ratio of those to outreach ones.

Did you notice montage posts start to slowly build up as your footprint grew?

 

[blackwar85]

I attribute the non-outreach links mostly to the linkbaits starting to rank for keywords and getting a new wave of visitors.

Not sure about the ratio, but the links without outreach are usually from strong websites so each is very valuable.