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Major website mergers and acquisitions advisory and brokerage services in Japan

January 30, 2018

Mergers and acquisitions have become a popular business strategy for companies looking to expand into new markets. Nowadays, buying and selling websites has become most popular in Japan as well. There are also business advisors and brokers specialized in buying and selling websites.

The main functions required of the M&A advisors are as follows:

1. look for a seller or a buyer
2. provide negotiation support
3. conclude a business transaction

 

M&A advisory firms typically charge a commission (in form of ~% of contract price) when a business transaction is concluded. Business brokers specialized in buying and selling websites are always the same. In this article, we will introduce four major companies engaged in brokerage services for buying and selling websites in Japan.

 

 

(1) Sitecathcer

–URL:http://sitecatcher.net/

–Operator : Faber Company, Inc.

–Fee (1) without brokerage service – direct negotiation

-Basic fee : N/A

-Commission : 3% of the contract price

-Minimum commission : 50,000 yen

–Fee (2) with brokerage service

-Basic fee : 100,000 yen

-Commission : Commission for contract price are calculated based on the following Lehman Formula.

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< 20 million yen: 10%

20 million yen – 40 million yen: 9%

40 million yen – 60 million yen: 8%

60 million yen – 80 million yen: 7%

80 million yen – 100 million yen: 6%

> 100 million yen: 5%

——————————————–

–Minimum commission 200,000 yen

–Comparison of commission for contract price of 25 million yen <<2.55 million yen>>

100,000 yen+2 million yen　(20 million yen ×10%)+450,000 yen　((25 million yen – 20 million yen)× 9%)

–Features

——————————————–

-Established in June 2005.

-The number of transactions so far has exceeded 700, and the total number of websites registered for sales is 2,500.

-Administrative scriveners, who are familiar with buying and selling websites, make contract documents free of charge.

-Two plans, direct negotiation plan and brokerage plan, are available.

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(2) Site M&A

–URL : http://www.sitema.jp/

–Operator : GMO Internet, Inc.

–Fee (1) without brokerage service – direct negotiation

-Basic fee : N/A

-Commission : Sell: 15% of the contract price / Buy: Commission-free

-Minimum commission : N/A

–Fee (2) with brokerage service

-Basic fee : 100,000 yen

-Commission : Commission for contract price are calculated based on the following Lehman Formula.

——————————————–

< 20 million yen: 10%

20 million yen – 40 million yen: 9%

40 million yen – 60 million yen: 8%

60 million yen – 80 million yen: 7%

80 million yen – 100 million yen: 6%

> 100 million yen: 5%

——————————————–

–Minimum commission 300,000 yen

–Comparison of commission for contract price of 25 million yen <<2.55 million yen>>

100,000 yen+2 million yen　(20 million yen ×10%)+450,000 yen　((25 million yen – 20 million yen)× 9%)

–Features

——————————————–

-Company listed on the first section of the Tokyo Stock Exchange, with good reputation and achievement. (The GMO group is a comprehensive internet company which nine group companies are listed.)

-10 years of management record

-Good connection with listed IT & Internet companies and excellent companies.

-The price of websites less than 1 million yen is a marketplace type (1), that direct negotiation between buyer and seller in auction form is conducted. The price of websites over 1 million yen is M&A service type (2), that brokerage service by experts are provided.

——————————————–

(3) SITESTOCK

–URL:http://www.sitestock.jp/

–Operator : SiteStock Inc.

–Fee (1) without brokerage service – direct negotiation

-Basic fee : N/A

-Commission : 3% of the contract price

-Minimum commission : 50,000 yen

–Fee (2) with brokerage service

-Basic fee : 100,000 yen (Only in case of contract signings)

-Commission : 10% of the contract price

–Minimum commission : N/A

–Comparison of commission for contract price of 25 million yen <<2.6 million yen>>

2.5 million yen　(25 million yen ×10%)

–Features

——————————————–

– Started in 2007.

– Business approach to several thousand companies. (There are many affiliated partners.)

– (1) the lowest prices in the industry.

– (2) A contingency fee type commission, commission-free in case of contract failure.

——————————————–

(4) SITERADE

–URL :http://www.site-trade.jp/

–Operator : ZESTUS, Inc.

–Fee (1) without brokerage service – direct negotiation

-Basic fee : N/A

-Commission : N/A

-Minimum commission : N/A

–Fee (2) with brokerage service

-Basic fee : Commission-free

-Commission : < 100 million yen: 10% / > 100 million yen: Separate consultation

–Minimum commission 300,000 yen

–Comparison of commission for contract price of 25 million yen <<2.5 million yen>>

25 million yen ×10%

–Features

——————————————–

– Established in July 2006.

– Specialized in corporations. Websites operated by individuals are not eligible.

– (2) A contingency fee type commission, commission-free in case of contract failure.

——————————————–

※Amounts are all tax excluded. As of 27 March 2017

 

 

Given the above information can clarify the following two points:

First, there is a trend that small-scale business websites become a marketplace type that buyer-seller interact directly. On the contrary, buying and selling high-priced business websites are usually conducted with support of the M&A advisors.

Second, each M&A advisory company has different commission rates and basic fees, but the basic fee structure is more similar to each other.

 

Please note that company which offers a lower commission rate is not always good. M&A service quality and engagement are more important than the fee. For good mergers and acquisitions advisory and brokerage services, it is more important that the company how to negotiate with good partners to make good conditions and how quickly it can make a prompt decision. For this reason, even if the commission are somewhat high, the overall merit will increase when the transaction is concluded.

 

It would be a good idea to have these options when launching a new business or as an exit strategy for your business.