Selling a site to a network

[AdamC]

A good friend of mine has run a forum for the past 7 years and brings in a healthy income with which he is happy with.

A few days ago he was emailed by someone from a network that operates many forums in the same vertical, asking if he wants to sell the site.

My friend emailed back, saying he could be and provided some basic, very modest numbers just to see what they came back with, also he's unsure if they are just fishing so very reluctant to provide real figures, especially as they are his competition.

They came back with an offer that works out just 20 months times what he said the site makes a month, which obviously wouldn't fly.

This company reckon they made the initial offer just to show they are serious, but want real figures before making a real offer.

Can anyone with experience advise on how to proceed with this kind of thing?

 

[slowboiled]

Only a bit of experience with this, one went well one not so much. This is likely all obvious to you, but the obvious stuff will save some drama.

-Tread lightly and quietly until agreements are signed.
-Get to know personally, as much as possible, the principals/board of the comp trying to buy. Buy a plane ticket.
-Bulldog lawyer somewhere in the process to at least be a presence on your friends behalf. KW=Bulldog
-A heavy dose of due diligence with any current or recent partnerships/jv's the network is in that you can hunt down. From the bottom to the top you can generally get an objective feel for how the place is run and what they are willing to do(good and bad).
-Some kind of NDA/non circ/non compete(not sure about that one given they own others in the niche) drawn up by said attorney that addresses the primary concerns your friend has.

Best of luck and success to your friend.

 

[AdamC]

Thanks, some sound advice.