Go inside a $5,000,000 domain name sale. Ever wonder what happens when negotiating a multi-million dollar domain name sale? Hear Alan Dunn talk about a $5 million domain name transaction from start to finish. Learn how the engagement happened, why blood diamonds were not an option for payment, offers made during negotiation, where the deal stonewalled and how a sudden change of course ultimately executed the deal.
In this episode of Domain Stories, host Alan Dunn tells the story of a 5-million-dollar sale. Alan is simultaneously honest and snarky in his retelling of the story, making for an entertaining 14 minutes. Clearly outlining his episode, Alan provides 7 areas of the domain buying and selling process: 1) the initial inquiry, 2) signing our life away, 3) forming a sales strategy, 4) negotiating the sale, 5) the standoff, 6) a sudden change in course, and 7) a deal agreed.
Alan frequently receives requests to buy a domain name, but most sales leads are worthless; usually they are people trying to sell a domain name for too high a price or selling a domain name that isn’t in high demand. However, in today’s story, a big brand reached out about selling their valuable domain name, and they already had a buyer interested. The brand was obviously shopping around for representation, but NameCorp won the chance to represent the seller. This was step one, the initial inquiry.
Step two was to get a written agreement in place. NameCorp’s standard contract is pretty tight, vetted by 100s of lawyers, tweaked and tuned, and provides an easy read to new clients but it is expected some reviews will come back with a few red lines. In this case, the contact also came back with a 37-page master service agreement, which Alan says is a sign of a company that needs a “serious internal overhaul.” Alan ended up deciding that it would be more trouble than it was worth to negotiate the agreement, so he signed it as-is.
The third step was forming the sales strategy. Much of their strategy was already formed and agreed upon from prior conversations, but they wanted to clarify their plan before getting back to the buyer. Alan and the company settled on an asking price of 12 million dollars, and then moved on to step four: negotiating the sale. Contacting the buyer is “where the real fun begins” for a broker. Since Alan’s client was in no rush to sell the domain, Alan decided to have a little fun with the buyer, who showed classic desperate signs to acquire the domain name. As soon as the buyer received his contact information, he called and emailed Alan countless times. Alan waited a day or two to respond, and then set up a call for the following week, which was a strategy to show the lack of his rush to sell. The buyer initially offered $500,000, and as a rebuttal, Alan provided data to show why 12 million was a much more reasonable amount. Within 24 hours, the buyer upped his offer to 1.2 million, and then eventually to 1.8 million before the going silent for a while.
Stage five was the standoff. After many conversations, Alan had convinced the buyer to raise his offer to three million dollars, but it was obvious that the buyer had promised his higher-ups that he could acquire the domain for under three million. Because of these false expectations internally, Alan found himself in a standoff. He was ready to “carry this deal into retirement” until he got 10 million dollars for the domain.
Next: a sudden change in course appears. The owner of the domain called Alan and wanted to move forward more quickly with the sale. Now, Alan had more flexibility to execute the sale, but still didn’t want to drop the price too low. It is very important, he says, for a broker to stay consistent. After a while, he felt that internal roadblocks within the potential buyer’s company was blocking any higher offer, and that the best solution was for the two CEOs to talk directly and hash it out. This resulted in the final step: a deal agreed. A week after the conversation between the CEOs, the buyer purchased the domain name for the price of five million dollars.
Outbound Links & Resources Mentioned:
- Most sale leads are poor – it’s important to keep your eye out for the valuable ones.
- After the initial inquiry, it is important to get a written agreement in place.
- It is important to get on the same page as the client before responding to the potential buyer.
- You can always find data to justify a high or low price point.
- Often, a standstill in a deal is a result of miscommunication internally.
- It is important for a broker to stay consistent and not drop their initial price too much.
- Sometimes, when you’ve hit a wall with a buyer, it can be better for the broker to play coach rather than player.