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Reprinted with permission of VotanWeb.com
You awaken one morning to the realization that the website you've poured so much time, energy and thought into; the dream that was once the preoccupation of your every waking moment has turned sour - what do you do?
Market forces, changing consumer tastes, cash flow problems, or some unforeseen outside factor has brought you to the point of not being able to keep things going much longer. Do you, shut the doors and call it a day or declare bankruptcy? These options are certainly worth considering but though you weren't able to make it happen, does not necessarily mean that your business isn't valuable.
If your website is failing, tough decisions need to be made. At the best of times, making objective decisions about something so close to you, something that you've put so much thought, energy, planning and dreaming into, can be challenging. Conditions such as these make it all the more difficult.
Despite how things may appear at such a bleak moment, oftentimes failing websites are able to find buyers. Though it may seem unlikely, there are people and companies out there looking for opportunities to acquire failing or troubled websites.
Here are seven good reasons why a buyer may seriously consider purchasing your website:
The buyer may already have an existing website like yours and, by combining the two, be able to operate at lower cost.
The buyer may have expertise in restructuring or repositioning websites, and has a plan to make your website profitable.
The buyer may decide that it is more feasible to acquire your website, to invest in it and make it successful, than it would be to build a comparable website from the ground up.
The buyer may have sufficient finance sources to carry the loss until your website becomes profitable.
The buyer may have lower financial expectations and feel that, by lowering expenses and perhaps making a small investment, modest profits are achievable.
The opportunity of a sale may, however, give rise to tangential issues needing consideration. It's very likely that by this point, in an effort to keep things going as long as possible, that you've incurred some personal liability for your website debts. You may even have pledged some personal assets as security. If the proceeds of selling your website won't be enough to pay off all your creditors in full, then you'll still be personally liable for the previous arrangements that you made.
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"Sell Your Troubled Websites." 123HelpMe.com. 21 Feb 2020
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A 'friendly' buyer may be willing to assume your personal liability. Ask your creditors if they are willing to transfer the indebtedness to the buyer of your website. The creditor may be responsive to this, as long as the website buyer has a stronger financial position than you.
With an unsecured debt, the buyer may be willing to pledge property, or any number of collateral assets, effectively securing that debt, and eliminating your personal liability. Obviously, for this to make sense, the website buyer must have assets of sufficient value - in most cases, assets of greater value than the unsecured debt itself.
If the creditor will not allow the buyer to assume your personal liability on the debts of the business, you can still have a written agreement with the buyer stating that they will pay the specified debt, and indemnify you from those obligations. Lenders are always eager to have additional people on the hook. The advantage to you, in such an arrangement, is that you will no longer be primarily responsible for the debt, however you will remain secondarily responsible. Should the website buyer not make good on the debt then the creditor will retain the right to hold you responsible for any amounts left owing.
If you have pledged personal assets to secure a debt, you may want to see if the buyer is willing to substitute their property as security in order to allow the creditor to release any liens on your personal assets. You'll need both a cooperative buyer and creditor for this to be workable.
None of these solutions are standard options, but rather strategies that you may want to look into. Each website deal has its own dynamic and creates its own unique set of challenges and solutions. Getting to the right solution, the one that works best for all parties is a challenging, time-consuming process.
Nobody said it would be easy to sell your failing website, especially at this juncture. The value a buyer is willing to put on your website may not be in line with your own estimates. In negotiating the sale there are several areas to stress.
Never let your ego get in the way. Don't make excuses and don't confuse the failure of the website with personal failings.
Allow the buyer to focus on the upside - their notions of unrecognized potential, room to reorganize and ways to rebuild.
Consider your personal exit strategy in terms of indemnity and liability as well as the cash that is being offered.
In some cases the kind of sale we have discussed is either not workable, or simply not on offer. If such is the case, you may want to consider closing the website and not running up any more debt. You should also consider negotiating with your website creditors in order to come up with some settlement. They will usually prefer partial payment over the alternatives - either suing you, which is costly and not necessarily effective, or waiting to take a smaller percentage of your bankruptcy liquidation.
A settlement with creditors can protect your subsequent credit worthiness and your personal assets. If your corporation or LLC has debts that you have personally guaranteed, most creditors are more likely to take a percentage of what's owed, rather than looking to seize your home, car, or stock certificates. They will most likely not want you to go personally bankrupt. It takes too much time, and again they are likely to receive a smaller percentage. In conducting your negotiations you should keep in mind that an amicable settlement will benefit all parties in the long run.
Filing for any type of bankruptcy is likely to be problematic for all concerned. The process will not be friendly, nor take into account any goodwill you may have with your creditor and your credit worthiness may be damaged for years to come. Bankruptcy is an option that should be looked at only with the assistance of expert legal counsel.
The best way to ensure that all options have been looked at and the best course of action chosen, is to seek expert advice. An expert advisor who specializes in your industry sector can guide you through the process, assist you in evaluating the worth of the company and its assets, both tangible and intangible, advise on various tactics and may even know of potential buyers currently looking for your type of business.
Through it all, keep in mind that the key to navigating your current difficulties is to keep a cool head, think clearly and seek out the experts that can help you the most.