Setting the Stage for a Profitable Web Site Sale

Certified management consultant M. Victor Janulaitis has worked in the information technology field since 1967. Some of the projects his firm has consulted on since it opened nearly 20 years ago have been written up as business-school case studies. But when he decided to sell a successful Web site that he owned, Janulaitis had no blueprint for the process. He stumbled on some strategies that worked, and talked about them with freelance writer Karen E. Klein.

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I had a consulting practice, a software product that was very popular and a heavily trafficked Web site that had received some major Internet awards.

About a year ago, I wanted some capital for additional software development. I decided that even though the Web site was generating $20,000 to $30,000 in revenue every month, I wasn’t able to really sell advertising on it and I would do better selling it to someone who could leverage it and put the time and investment into keeping it moving forward.

The Web site, at https://www.supporthelp.com (and now called Service911.com), is primarily a search engine that provides contact information for computer hardware and software companies all over the world. I started it three years ago and had built a good community. We had links to lots of other sites and a high number of visitors. We also had good metrics, meaning that we knew where the visitors were coming from and who they were, so we could quantify our traffic.

When I first thought about selling it, I looked for a Web broker and found there were only a few out there. The ones I located wanted to give me 10 cents on the dollar. This was unacceptable, because I had an objective to reap a certain amount of value out of it. They also underestimated the site’s value. Experts guessed that it would sell for about $250,000. When I finally sold it myself, I received well over $1 million.

I looked into advertising the site on the Internet and placing traditional media ads. I also posted notices on some Usenet newsgroups aimed at business owners. Then I decided to put a “for sale” sign right on my site. I had the sign done nicely, and I created a detailed prospectus that I sent out only to interested and qualified buyers.

The experience was something like putting a sign in front of your house. I got about two or three inquiries every other day. It didn’t take a lot of time for my staff to weed through to the serious ones, and we weren’t in a hurry to sell the site because it was generating revenue, not losing money for us. Some e-mails were from those business brokers who wanted to sell it for me and pay me pennies on the dollar. Then there were the classic looky-loos, offering to buy the site for $5,000. I also got a number of inquiries from foreign nationals who were interested in purchasing a U.S.-based company as a way to gain entry into the United States. After about three months, I had three serious offers.

The two most viable candidates found me when they were trying to expand their Internet businesses. They all took a look at the site, investigated it and us, analyzed our site traffic figures. We signed nondisclosure agreements and entered into negotiations. Three weeks later, I sold the site to a company that plans to go public. They have joint ventures lined up and they are putting $10 million in national advertising into the site. I got the cash I wanted, plus stock in their company that is expected to increase in value. My employees who worked on the site got some of the stock as a performance bonus. I expect a couple of them will probably wind up with college money for their kids from the deal.

Building a Web site that is commercially viable is not like falling off a log. It requires a lot of effort and careful forethought and you have to put time and money into building the franchise. We focused on winning awards and getting traffic to the site. During the sales process, we didn’t stop doing that. I wanted to make sure I maintained traffic, because you don’t want traffic to fall off right when you’re getting ready to sell it. In fact, 50% of the sales price was contingent on my delivering the amount of traffic that I said I had within a month. We achieved it in 14 days.

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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.

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At A Glance

Company: Positive Support Review Inc.

Owner: M. Victor Janulatis

Nature of business: High-tech management consulting and implementation.

Location: 2500 Broadway, Suite 320, Santa Monica 90404

Web site: https://www.psrinc.com

E-mail address

Year founded: 1981

Employees: 12

Annual revenue: $2.5 million