Yesterday, I wrote an article advising people that they should ensure there aren’t any conflicts of interest when choosing to work with a domain broker or consultant. Adam made a very good point in a comment, and I want to discuss it further. In the comment, Adam wrote, “someone seeking advice should likely look for an expert and that expert should be well connected.”
One of the greatest value adds of a domain broker or a consultant is his knowledge of the domain space. There are many general business consultants and even IP lawyers without (much) domain industry experience who may offer advice related to domain names. Although there is probably some value from these outsiders, it is beneficial to work with someone who has experience navigating the world of domain investors.
Most connected domain consultants and domain brokers will be able to give advice on how to negotiate with certain buyers and what types of offers can be intriguing. They know that a portfolio company may or may not be interested in dealing a specific domain name, and they can advise on whether an opening offer will even elicit a response. This information may only be known by “insiders” who have knowledge of the domain space and the people within the business, and it is invaluable in trying to put together a deal or build a domain name strategy.
In my article, I was trying to make people aware that there is the potential for a conflict of interest because there aren’t any firm ground rules of engagement. A prospective buyer could engage a broker or consultant to negotiate a deal with a portfolio owner who has been represented by that broker. Although the consultant or broker should do their best to be impartial, they may realize that the bigger fish and longer term partner is the domain portfolio owner rather than their client. I presume most of the professionals who offer these services are ethical in their dealings, but it’s good for people to be aware that there is the potential for conflicts of interest.
Hiring a domain broker or domain consultant is a wise move for a person or company that needs to buy a domain name or create a domain name strategy. As Adam correctly pointed out, working with someone who has domain industry expertise and connections is helpful. The client should ensure that there aren’t conflicts and that the professional is working with the client’s best interests in mind.
I once did a very very large domain/website sale through a broker (nobody any of you would know) and I didn’t find out until the deal was about to close that he was representing both the seller (me) and the buyer (he was getting a finders fee). I don’t think it really mattered any, since I ended up doing the negotiations myself, but he should have disclosed it to me ahead of time.
I am still very happy I did the deal and don’t regret any of it. The dual agency part just left a bad taste in my mouth.