When Is The Right Time To Sell?
As the founder and CEO of one of the world’s largest privately owned dating companies, I’m often approached by people who have a dating domain or website and are looking to sell it.
The growth of the dating category around the world and in particular the growth of white label sites within the category has led to significant consolidation within the marketplace and this is certainly set to continue in the years ahead.
It has become increasingly difficult for independently-owned dating companies to profitably and ethically acquire traffic in this marketplace, when competing with VC-backed entrants like Zoosk or IAC portfolio companies like Match, Singlesnet, Peoplemedia or OKCupid.
The fact is that it is difficult to remain profitable against these companies when you manage your development, hosting, customer support, database, CRM etc in-house, as the economies of scale just don’t work. This is why many dating site operators are deciding either to sell or to move their sites to a white label platform.
But when is the right time to sell?
Quite simply – when you don’t need to. You’ll get the maximum value from your business when it’s still growing, when you’re showing profitability and you can demonstrate future growth.
I see too many dating sites looking to sell when the owner is simply jumping from a sinking ship. They’ve lost and they realised it too late.
As a buyer, what do we look for in a dating site?
We look to see where we can add value and where we can eliminate overheads. Through our WhiteLabelDating.com platform, we’re able to pretty much eliminate development, hosting and customer care costs as it is shared with all our partners. However, the greatest spend is often marketing and customer acquisition – this is also the area where most companies have unique differentiation and skillsets.
Often, for these reasons we’ll also consider a talent acquisition where part of the reason we buy a company is for their staff and proprietary customer acquisition techniques, affiliate relationships, etc.
The growth of white label and niche dating will only erode the middle market further, swallowing up territories traditionally owned by small and medium sized dating companies. Dating sites who differentiate by their niche, technology or marketing strategy are particularly vulnerable to competition from white label partners who can simply duplicate that strategy on a ready-made platform.
Most buyers will consider a buy vs build approach – up to a certain point, it makes sense for them to buy a competitor, beyond that it makes more sense to build their own proposition and steal that niche, technology or marketing strategy.
In summary then, you should sell when you are still growing, can demonstrate profitable growth and look for buyers who could eliminate some of your overheads to make your site more profitable than you are currently. Alternatively, consider a white label provider in the medium term so you can focus on your marketing to build a more profitable business that could be sold later for a greater amount.
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