We’re joined here with Colton Moffitt, a former Flippa Account Manager who founded Pendulum Insight, an online business brokerage. We break down his recent sales and learn how he started his brokerage!
Tell us about your professional background and how you became a broker.
During my time at Flippa I worked as an account manager focused on assets in the $30k-$200k range. If an asset wasn’t an ideal candidate for brokers, I helped the seller achieve a fast exit at a fair price.
There are unique advantages to the live, open auction format. I learned to appreciate and leverage these dynamics instead of trying to mimic the traditional brokerage process.
Outside of my experience at Flippa, I have a background in open source intelligence and security consulting.
You’ve now sold two businesses totaling $99,000 on Flippa in the two months you’ve been an online business broker. Can you tell us about each of the businesses and why they sold for $19,000 and $80,000?
The e-commerce site was the brainchild of a creative gentleman with a gift for spotting trends, marketing novelty products through online PR, and automating e-commerce operations. This site had a lot going for it from the buyer’s perspective: streamlined operations, minimal time commitment, no inventory hassles, established influencer relationships, and organic traffic from viral posts and media coverage.
We weighed our options and decided to let the market speak. The risky $1 reserve strategy paid off for the seller because he provided a clear, compelling description of the opportunity and delivered fast responses to every question bidders sent my way. Bidder confidence was reflected in the volume and frequency of bids.
The FBA business had some issues and, recognizing this, the owner priced it to sell. He was ready to walk away from the business and focus on other things.Despite these issues there was value in registered trademarks, excellent seller feedback, supplier relationships, and advantages granted within the Amazon system. We had multiple strong BIN offers at and above the reserve price. The assets eventually sold for a very low multiple but it was a quick close that both the buyer and seller are pleased with.
What’s the most important thing you learned as an account manager that has helped you become a now successful online business broker?
Valuation is so much more subjective than I expected. In fact, I’ve often been pleasantly surprised by which assets really take off at auction. I’ve been equally disappointed by duds that I was sure would be winners.
An auction is more chaos than analysis: timing, competition from other attractive listings, bidders’ emotions, seller’s patience, and so on.
How were you able to launch your brokerage so quickly? How has the Flippa platform helped with that process?
I’m focused on the range of assets I worked with as an account manager. These assets are below the radar of brokerages, they’re easy to transfer, and they’re quick to close out. This allows me to benefit from the advantages of the live, open auction format and forgo competition with traditional brokerages.
For sellers out there who are interested in selling their websites, what advice would you give them?
1. Take advantage of exit planning resources and sell when the business is consistently growing.
2. Work with people who specialize in selling assets like yours. If you’re in a time crunch or have an appetite for risk, talk to me about an auction. If your business is more complex, you require discretion and proactive outreach to vetted buyers. In that case, a team like Dealflow Brokerage is my go-to recommendation.
3. Above all else, keep calm and be polite. When a deal falls apart, it’s almost always an attitude problem arising from a miscommunication. I’ve seen a seller kill a $200,000 offer over negotiation for one extra dollar. Yes, $1.00. Don’t do that.
Colton develops high leverage opportunities for his partners and clients. He’s currently traveling the world, assembling a consortium of deal makers committed to the pursuit of preeminent ingenuity, integrity, and intuition. You’re welcome to schedule a call at PendulumInsight.com or connect with him directly on LinkedIn.