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As we’ve seen from many online businesses over the years, a lot of the really big money comes from selling your business to an even bigger business! Think back to 2006, when Google bought YouTube, netting the previous owners a tidy $1.65 billion. (When you think about it, it seems like Google got an incredibly good deal there!) Or back to 2014, when WhatsApp was sold to Facebook for a whopping $19.3 billion.
Of course, these kinds of acquisitions happen all the time. You don’t always hear about them, unless you have your eyes turned towards the right business tech websites. The ones that make big news and the billion-dollar acquisitions that occur between two really big names. But deals that feature figures hovering in the six, seven, or even eight figure range are very common in the world of online business acquisition.
So a lot of people who are starting up online businesses are often looking to build them up to a certain point and then sell them for huge profits. If that’s what you’re thinking about currently, then you should definitely research your options carefully.
Here’s a quick guide to the things you should be thinking about.
How much your website is really worth
The reason that Facebook’s acquisition of WhatsApp costing $19.3 billion surprised so many people was because WhatsApp was actually a relatively young company at the time. It was just under five years old – getting the amount of growth that WhatsApp did by the time of the acquisition is basically unheard of.
This sum makes many wonder about the Google-YouTube deal back in 2006. YouTube was a very young company itself at the time – just over a year and a half old, in fact. So a $1.65 billion price seemed incredible, especially because the world was only just getting used to online businesses being worth that much money! But even back then, many of us knew that YouTube was an incredible platform. Was that $1.65 billion actually a good price for YouTube? Should Chad Hurley, Steve Chen, and Jawed Karim have held out for more cash?
It’s difficult to say; we don’t know if any professional evaluation of YouTube’s worth had been performed from their side. And that brings us to an extremely important part of selling an online business: actually making sure you get what it’s worth. You must make sure you know your website worth before entering these sorts of deals.
Considering the buying company
A lot of people didn’t like Facebook buying WhatsApp. Why? Because many people saw WhatsApp as an alternative to Facebook Messenger – it wasn’t just that WhatsApp wasn’t Facebook, but that the data you shared on WhatsApp had nothing to do with Facebook. All of a sudden, your messages were part of the Facebook machine.
Many also wish they could turn back the clock at stop Google’s acquisition of YouTube. There’s a growing concern about the amount of power Google has, both on and off the Internet. From online censorship to political meddling, Google has become worryingly influential on man people’s livelihoods. The fact that they own the go-to video sharing service no longer seems that cool.
Of course, neither of these deals killed the astonishing growth of either website. But let’s say you get an offer from an incredibly big online company. Heck, maybe even from Google or Facebook. You should consider the implications of these companies owning even more of the online landscape. Many new online businesses are beginning to sell themselves as being real alternatives to these privacy-robbing giants – if you do the same, then selling your company to those giants could be seen as hypocrisy. The ethics of your buyer is important to consider.
The transfer of ownership
You need to make sure you’re absolutely clear about the implications of this new company owning your business. It could be that you remain a part of the business – you may even still run it (to an extent). But you need to consider the implications for your employees as well as the data of your users.
What exactly does the buying company want to do to your business? It’s possible that selling it off comes with a bunch of risks for your employees. Is there any guarantee that there won’t be severe downsizing once the deal is made? In fact, do you even know if the company hasn’t bought your business for the sole purpose of slowly dissolving it? (Thankfully, this didn’t turn out to be the case for WhatsApp, though Facebook would surely have suffered had they not made the purchase!)
Make sure you’re in the know about the employment laws in your state when it comes to the transfer of ownership. You won’t be completely in the clear just because you’re no longer part of the company as a result of the sale!
