I had an experience over the last couple weeks that I hope by me sharing others will be able to learn from.
With my focus on selling my FBA business other unique sales opportunities have presented themselves.
Let me tell you a story about what happened with one (eventual six figure deal)…
An opportunity came up to sell one of my affiliate sites strategically with the idea that they(startup company) would improve the site and based on the strategic nature of the purchase would be able to increase the value of their business significantly.
After some initial discussions it was clear the amount of cash available in the business was too low to be able to acquire the site at market value (let alone the premium that usually goes with strategic acquisitions).
It would have been had I not been recently working with some clever private equity types who had been looking to creatively structure FBA acquisitions.
So what deal can we strike when the business will be worth more in the hands of the acquiring company but the acquiring company doesn’t have funds to purchase the site?
Our clever solution was…A domain/website lease agreement which included a modest % of any increased earnings paid to me with the purchase of an option to buy the site in 1 year for a premium price, along with an agreement on minimum standards for the site and a few rules about what they couldn’t do to the site. The domain and website stay in my control until the option to purchase is exercised.
Benefits to Me:
- Premium purchase price for an affiliate site (30x)
- If option isn’t exercised I will still own an improved website
- Upside % during lease agreement
Benefits to Purchaser
- Use their knowledge and connections to greatly improve monetization of site
- Able to show revenue growth with minimal capital outlay (increase value of their business greatly & raise funds at a greater valuation)
- Able to grow total size of business (increase value of their business greatly)
How Not Being Humble Almost Cost Me Six Figures!
I GREATLY overestimated my skills! With this site I spent minimal time on it but thought it had been reasonably well set up from a monetization standpoint.
The one way the deal wouldn’t make sense to do is if they were unable to improve its earnings then I would get none of the upside and it would take away their incentive to exercise the option to purchase the site.
I contemplated not doing this deal because I doubted if the improvements would make a meaningful difference – I WAS WRONG!
How Did They Improve The Site?
- Better looking layout
- More focused on the primary offer
- Pop-Up to take visitors to the primary offer
- Improved usefulness of the content
Bottom line – nothing crazy was done and I had to eat some humble pie that even with some pretty straightforward changes they were able to make substantial improvements to the click through rate and eventual earnings of the site!
Why Share This Story?
I think it was a unique deal and the more times people can read about unique solutions to problems the more likely they will be to recognize when a unique solution may exist.
Plus, I like to share all my failures and wins…although this is certainly a win it is very clear I had failed at monetizing this site to the best of its ability!
What Did I Learn from This Deal:
- Creative deal structuring can make deals happen when simple deals aren’t possible
- Strategic sales make the pie bigger!
- Being humble and knowing that no matter what you think you know everyone has something they can do better than you and learn from them.
- There are areas in my business if I spent more time would result in substantial earning improvements!
- I need to improve my monetization skill set