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How would you handle this?

Labeled as question in Domain Buying and Selling Discussion started by thevictor, Sep 21, 2019.

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  1. thevictor

    thevictor Established Member

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    I reached out to a company CEO via LinkedIn asking if he would be interested in purchasing my domain for his business. His response "We might buy it, selling shares to you for the domain. We don't have any cash to spare."

    Just curious if anyone here has had any similar proposals in the past and how did you handle it?

    Thanks in advance!
     
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  2. mAd MaX

    mAd MaX Established Member

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    He is telling you to buy yourself your domain, what I understand.

    He isn't interested that what he meant imo.
     
  3. thevictor

    thevictor Established Member

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    What do you mean by "buy yourself your domain"?

    He did say, "we might buy it", which to me, indicates interest.
     
  4. D Haynes

    D Haynes Top Member VIP

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    I'm assuming he meant he'd give you shares for the name. This can be a profitable deal assuming the company is doing well and expanding. You would want to do as much research about the business as possible. After all, a 5 percent share of failing business is worthless.
     
  5. Abdullah Abdullah

    Abdullah Abdullah Top Member Epik.com Staff VIP

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    If the business is good then having shares will be great deal in the long term.
     
  6. BaileyUK

    BaileyUK Top Member VIP

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    indeed, It sounds like a newly listed company, Why not have a look at their public profile and share price.(particularly history from start-up) To my mind if somebody is offering you shares then they expect the domain your offering to be of value to them (mind you they might be at 10c, or less a share) Obviously their total capital value comes into play here

    These type of counter offers are part of what makes domaining interesting imo. Convert your expected selling price into share ownership If you have a gambling instinct and belief in the companies objectives, board etc.

    I personally would love to convert any of my domains into Company investment, IF I thought they were on the right-track. I would factor in a price/conversion relevant to the risk factor though (against a cash sale)
     
    Last edited: Sep 21, 2019
  7. poweredbyme

    poweredbyme Democrat.win VIP

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    Lack of cash is a negative sign for old companies. I would be interested if they are a new company and their offer is good.
     
  8. lolwarrior

    lolwarrior Founder, Brands.International VIP

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    Take the shares, why not :)
     
  9. thevictor

    thevictor Established Member

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    Thanks all for your insights.

    His proposal company shares is intriguing to say the least. From what I was able to dig up, it doesn't look like the company is public as of yet. It is tough to value a private company without having access to any of their financial data. This makes it more interesting and a bit complicated at the same time.

    I have some reading to do about owning shares in a private company and how those would convert if and/ or when they go public.
     
  10. poweredbyme

    poweredbyme Democrat.win VIP

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    So it's not a registered company for now? Then I would be interested to learn more details about them. If the new company will be owned by another company I would be more careful. Because it would make that "new" company just another copy of an old company with cash problems.
     
  11. Sheogorath

    Sheogorath Top Member VIP

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    Interesting and encouraging post :)
    Shares for a domain name... that's not something we see every day.
    I don't think he was joking, but there is the possibility he was being sarcastic.

    I suggest to do a research about the company and start high on the negotiation.
    For example(numbers can be entirely different based on your research): You can offer 30% and then go down when he says 10% and meet in the middle or close to what you want.

    Best of luck! :)

    P.S - It will be interesting to know what happened, so feel free to share some details later(if you are allowed and want to ofc)
     
    Last edited: Sep 22, 2019
  12. thevictor

    thevictor Established Member

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    Yea. Looks like they are private and any shares offered would be preferred shares with no voting rights (which I don't really care about to be honest). From what I understand, if the company decides to go public then does shares would be converted to common stock. If the company is bought or merges with another company, all types of stock bust be satisfied as a debt during the transaction process. So basically, he is offering to sell me debt.
     
  13. thevictor

    thevictor Established Member

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    Thank you! That was my first thought, but I don't think he was being sarcastic since he accepted my LinkedIn invite. Then again, you never know... He could be playing hard to get with the "no cash to spare". After all, giving away debt doesn't cost him anything in the short term.
    I will share any details I am able to if and when we can come to a "meeting of minds".
     
  14. poweredbyme

    poweredbyme Democrat.win VIP

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    I think you mean a different thing by "going public". I first thought you mean the company has not yet been announced publicly. But now I think it may be something different.

    By "going public", do you mean quoting company shares in a stock exchange under an authority like SEC in the USA?


    The "debt" will not be yours if your shares are sold. You are confusing. Your shares will be a debt of whom will buy them.
     
  15. thevictor

    thevictor Established Member

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    That is what I meant by going public. From the looks of it though, the company has been announced publicly, but is a private entity.

    If I own the shares, doesn't it mean that the debt will be mine and if the company is sold or merges with another company, that debt would have to be satisfied? From what I understand, and I could very well be wrong since I am no expert in that field, whatever the new entity is would have to buy the debt from me?
     
  16. poweredbyme

    poweredbyme Democrat.win VIP

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    Then it might be an old company with cash problem. I would be more careful. Cash problems are acceptable for new companies but are bad sign for old companies. Old companies may have cash problems but are expected to have good credibility in financial institutions to borrow from them when they see an opportunity like purchasing your domain.

    If the company is currently in debt, yes you will be buying its debt. You can lose only your shares in most cases.

    Debt maybe because of new investments, losses, cash flow inconsistencies, etc.. Some debts are truly dangerous, some debts are not. It depends on structure of liabilities and assets. Profitability is very important. It affects debt repayment capability and growth. Companies may be in debt. It's not unusual.

    When you are buying a share, you are buying the debts as well. But in fact you are buying its net worth after deducting its debts. Therefore you are, in fact, not buying debts. However it's entirely up to the buyer. If you see huge potential you may want to pay more than its net worth.

    Yes if a company is sold or liquidated its debts must be paid first. Share holders would receive the remained amount, after the debts are paid off. In merging, debts or some debts might be handled differently. In going public some debts may have to be paid. These rules may be different in different countries.
     
  17. frank-germany

    frank-germany domainer since 2001 / musician Gold Account VIP

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    great: go for it
     
  18. thevictor

    thevictor Established Member

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    I know what you mean, but I don't think too many businesses would go and borrow money from a financial institution to buy a domain name; unless it is a ultra premium, must have, big money, once-in-a-life-time opportunity. In your experience, is this a common occurrence?

    Thanks for your insights again!
     
  19. frank-germany

    frank-germany domainer since 2001 / musician Gold Account VIP

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    don't think it over
    just do it

    unless it's a domain you paid more the $5K USD for
     
  20. thevictor

    thevictor Established Member

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    Thanks. We'll see what happens. Since this is not a straight cash transaction, it may take a while to iron out the details. I wish it was as simple as just doing it :)
     
  21. poweredbyme

    poweredbyme Democrat.win VIP

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    You are welcome victor. In my personal experience, it's common in old companies if something cheap is offered to them when they don't have cash. I haven't seen/heard an example in domains. But it means nothing as it's practically possible.

    I don't think banks would give loans merely to purchase domains. But most 1+ years old companies have a cash credit line that's available 24/7 without needing any application. It works like personal credit cards. Most companies actually have credit cards as well. They can use their credit cards or cash credit line (if the domain price is high for a credit card) to buy domains as banks don't ask what they buy with credit card or cash credit. What they can't do would be only to apply for a loan to purchase a domain when the domain price is higher than their credit cards + cash credit line. Because banks wouldn't give such a loan unless the company credibility is high. Most companies don't have high credibility in banks as most companies have already debts to banks that have already filled up most of their credibility.
     
  22. poweredbyme

    poweredbyme Democrat.win VIP

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    In my opinion, if I offered my domain under 20k to a 1+ years old company and if the company offered me their shares for lack of cash, I would insist on receiving cash from them and would reject their shares. I would tell them I am open to a barter with something physical like a car or a machine if I actually need those physical goods.
     

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