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Thread: anyone know anything about buying an online company, (existing yahoo store)

  1. #1

    anyone know anything about buying an online company, (existing yahoo store)

    Hey all.. ok.. I'm gonna lay this out and see what advice I get.

    My wife and I are working on creating this company. Basically we want to sell little dog clothing, collars, carring cases, water bowls and accessories. I'm building the site now http://www.glamourdog.com

    anyway.. My wife is in contact with several suppliers. She has also spoken to one vendor who manufactures and sells her own dog collars... really fancy ones.. she has a Yahoo store. she's getting out of the business.. she's been in it for 4 years.

    According to the owner.. she has an established loyal client base of venders and retail customers world wide, and she sells approximately $X a month in sales.

    The owner and her partner are wanting to get out of the business because they have full time design jobs now, and they want to sell their company. They are selling it for a decent amount of money..$X x 4

    My wife and I are considering this company.

    I don't know anything about buying a company.. I want to ask a ton of questions.. but I don't know what questions I need to ask..

    Do I need a laywer? I'm assuming so so before I invest in a lawyer I want to find out if it's not worth going further. are there some tough questions I need to ask?

    tax returns? vendor, references? I have no idea?

    I kinda think it's a good oppertunity .. right place at the right time.. but by the same token .. if we just do our site. on our own.. we have no risk.. no real out of pocket expense to start off.. if we invest in thix company we are already several thousand in the hole from the beginning.

    anyone have any experience in this?

    thanks alot
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  2. #2
    Former Employee of Satan Napalm's Avatar
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    My first insticts would be to have a accountant take a look at their books, and see if everything is as good as the woman says. After that if everything is still cool have a laywer draw up a contract, and have them sign a restrict of trade, so that they wont open up exactly the same shop and take all there customers along
    Never underestimate the power of stupid people in large groups

  3. #3
    Moderator RazoRmedia's Avatar
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    depends on $x I suppose.

    If the price of buying this online yahoo store exceeds the price of starting your own then I would hire an accountant to scrutinise their accounts.

    You need to be sure they have a ready made customer base.
    Living the dream

  4. #4
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    I would

    In buying any business, always request to see sales reports and banking records. For online businessess, you will also want to take a look at traffic records to see if they are getting traffic from everywhere... or if they are actually spending $5000 a month on advertising to get $5000 a month in sales. This usually shows up in a high amount of traffic from just a few sales/advertisement URLS.

    If everything checks out, then an asking price of 3 to 12 times the monthly income of the business is typical. This fluctuates depending on the real value of repeat customers and the monthly traffic they have built up. (Double check those visitor statistics... you can get 50,000 pop-under ads from some companies for $100 and it's very easy to "inflate" site traffic for a few months before you sell it.)

    Either way, good luck. Hope you found a deal

    ~Barry
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