Buying or Selling an Online Business: A Legal and Financial Expert Webinar
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Whether you’re looking to exit a SaaS venture or acquire a burgeoning e-commerce brand, the path from “For Sale” to “Sold” is rarely a straight line. It’s paved with complex valuations and legal hurdles that can catch even seasoned entrepreneurs off guard.
In our recent webinar, I sat down with Matthew DeRusha, Practice Leader at LegalVision, to pull back the curtain on the M&A process for online businesses. From decoding multiples to navigating cross-border legalities, here are the key takeaways we shared to help you master the deal.
How to Value an Online Business
The most common question I get from founders is: What is my website actually worth? While we at Flippa look at 16 years of market data and historical comparables, the final number is always a mix of tangible data and intangible risk.
The Tangible: Data-Driven Multiples
We typically value online businesses on a multiple of their SDE (Seller’s Discretionary Earnings) or EBITDA over the trailing 12 months (TTM).
- SaaS: These currently command the highest multiples, typically ranging from 3x to 5x.
- E-commerce: These usually sit between 2x and 3x.
- Content/Blogs: While historically high, these are seeing some pressure (and lower multiples) due to the impact of AI and shifting Google algorithms.
The Intangible: Assessing the Risk
The “Risk” factor is what determines where you land on that range. When I’m looking at a business, I’m asking:
- Customer Concentration: If 80% of your revenue comes from one client, that’s high risk.
- Brand Goodwill: Do you have a loyal following and a trademarked brand? That lowers the risk.
- Operational Depth: Can the business run without you? If so, the value goes up.
The Legal Paperwork: From LOI to Completion
Matthew made a great point during our talk: a sale isn’t just one document; it’s a staged process designed to balance risk between the buyer and seller.
- Heads of Agreement (HoA) / Letter of Intent (LOI): This is the “commercial handshake.” It’s usually non-binding but locks in the price, timeline, and an exclusivity period so the seller doesn’t flirt with other buyers while the due diligence happens.
- Business Sale Agreement (BSA): This is the binding contract. It covers exactly which assets are transferring, intellectual property (IP) assignments, and non-compete clauses.
Sell Your Online Business With Flippa
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Seamlessly Negotiate and Receive Offers
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The Art of the Deal: Earnouts and Financing
In today’s market, I’m seeing fewer “all-cash” deals, especially for high-valuation businesses. Creative financing is often the bridge that gets a deal across the finish line.
What is an Earnout?
An earnout is a performance-based payment. The buyer pays a portion upfront, and the rest is contingent on the business hitting specific targets over the next year.
- For Buyers: It reduces the risk of a post-sale performance dip.
- For Sellers: It’s a way to achieve a higher total exit price if you truly believe in your growth trajectory.
Vendor Finance
Since traditional banks in the APAC region can be slow to finance digital assets, many of the deals I broker involve Vendor Finance. This is where the seller essentially acts as the bank, allowing the buyer to pay off a portion of the purchase price over time.
Preparing for an Exit (The 12-24 Month Runway)
If you’re planning to sell in the next two years, I tell my clients the work starts now. A “clean” business sells faster and for a much higher premium. Here is what I recommend focusing on:
- Clean Up Your Financials: Remove personal expenses like your car or home office from your P&Ls to show your true profitability.
- Document Your Operations: Build your Standard Operating Procedures (SOPs). If the business is 100% reliant on you, you don’t have an asset – you have a job.
- Get Your Legals in Order: Register your trademarks and ensure all contractor agreements clearly state that the company owns the IP.
- Prepare for Verification: Have “view-only” access ready for platforms like Shopify, Stripe, or Google Analytics so buyers can verify your data instantly.
The Bottom Line
Selling an online business is a “risk-balancing exercise.” The more you can de-risk the transition for the buyer, through clear documentation, stable earnings, and a willingness to offer performance-based terms, the more successful your exit will be.
Ready to see what your business is worth?
Get a free valuation on Flippa today or consult with LegalVision to ensure your contracts are exit-ready.
Sell Your Online Business With Flippa
Access expert guidance and the technology you need to list, market and close your deal.
400,000+ Weekly Active Buyers
20+ Multi-language Brokers
Seamlessly Negotiate and Receive Offers
Integrated Legal, Insurance, Finance and Payments
As a Certified Merger and Acquisition Advisor (CM&AA), I help both buy-side and sell-side clients navigate the complex process of selling their online businesses, from valuation to negotiation to closing.
I have over 6 years of sales and online brokerage experience. In my 2+ years working at Flippa I have sold 100+ businesses many as cross border transactions.
You can book a consultation with Fiona to discuss buying or selling online businesses here
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