$325k '20 income w/ $80k profit, $222k '19 income w/ $66k profit ... solid buildout workflow (2 wks buildout for most sites).<p>I'm focusing on a product and now selling my Web Dev shop. Two Dev shops are interested in buying. What price should I sell at? What other factors should I think about?
I see no actual prices posted by anyone, so here is something to use as a starting point:<p>Anywhere between $80,000 to $1 million. Realistically, around $160,000 to $650,000.<p>I am assuming that you don't have anything exclusive and that it is a run-of-the-mill (no offense meant!) web development shop.<p>Some factors that will push it to the higher end:<p><pre><code> - Great accounting and financial records
- Steady clients
- Large orders
- Exclusivity (others can't do what you do)
- Talented employees, if any, who will stay after sale
</code></pre>
I posted this just so you have something to start with. You know your situation better than me or anyone else.
You're essentially selling a job right now, unless you're completely removed from operations and new business development, but it sounds like you aren't. It would also depend on how well you retain your clients and how profitably your new customer acquisition will run without you (the degree to which your personal network pulls business.)<p>Would expect you to be able to sell for high five or low six figures, assuming you're currently fairly involved and there's no contracts, moat around clients, or special sauce in customer acquisition.<p>Why not hire a good manager instead? It sounds like you could pay them well, still pay yourself, and make your business more valuable if they can grow it without you in the critical path. They could also potentially contribute to the product.
Selling a consulting or web dev type business is different then selling a product based business. With some rare exceptions when you are selling a web dev business you are selling your client list, current and future planned work etc. With that, many times comes a set of developers that work for the business etc, but the primary payment is for the "book of business".<p>So the valuation isn't based on profit/loss so much as client list, client quality, avg client annual value and repeat business etc.<p>With the numbers you've shared, likely we are talking 10's of clients per year, or if it is higher then they are likely low value clients, meaning your book of business isn't worth much. I mean no disrespect, just trying to be honest as I have been through this.<p>I'd get the interested party to put a number out that they are thinking. Give them some basic info and let them propose a value and then see how you feel. Sometimes they need the business history bad enough to pay for it. Sometimes they have a need to angle into a few clients that you have and so they'll somewhat over value the business based on their opportunity.<p>Obviously the more sophisticated the business the more I could be wrong. If you really want an idea without sharing any details with the potential acquirer get with a business broker and have them do a non-binding quick eval to give you a ballpark. I've done that and paid a small price for it since I wasn't going to use them most likely, but it usually is worth the small cost (relative to the size business).
I spend a lot of time reviewing accounts of small businesses with the view of buying them.<p>I generally boil my offer down to:<p>3 times NET Profit
Plus cash in the bank
Less debt
Less a working capital adjustment.<p>I would offer around £300k for your business in a HOT and then head towards Due Diligence looking for reasons to validate that number -/+<p>Other offers will vary depending on buyer
Have a read of "Built to Sell". I have no experience in this area, but found that book eye opening. One example: expect to have to work for the buyer for at least a year as part of the contract of sale, part of the payment is vested.