I have no experience selling companies or doing exits. The closest experience is selling some good domain names and my car…
So I just want to put here some research I’ve been doing and some thought I had. This is not a normal reading about economic growth and formulas…is about passion, loving what you do and having a great life!
How much is worth your company?
There’s many formulas out there about how to valuate your business, just 1; EBITDA * FACTOR dependgin the category of business Times 3 or 10.
For me the one that make more sense is over EBITDA and assets the company has * 5 (or whatever for your industry), example:
I make 10K a month, net after taxes, 6K. = 72K Net year. We have technological assets of value of 100K, so 72*5 + 100 = 460K
Then the next question is: Will you sell for that money?
When to sell?
Are you bored? you are not enjoying it? you can’t handle the growth? you need the cash for some dramatic personal problem? are you having another business that goes better?
Just if you can avoid it, do not hurry, as much you hurry worst conditions you’ll probably get, personally, a good moment for me will be when you do not like anymore the project when you lost a bit the will. It’s about passion!
Will you sell your kid?
Never, but at some point maybe you need to let him go… with this I want you to think about your current personal situation.
Are happy with what are you doing? are you making enough cash to have a decent live? are you awake in the morning thinking about it? do you speak to everyone about it? can you still keep the business professional and handle the growth? etc.
There’s not many people out there that is working in something he is really passionate about it, that enjoys what is doing, and less making money from it…so even if they offer you good cash…will that cash change your life? …. keep reading…
What will you do next?
Are you getting enough money that you and your family can retire? congrats, now you will be probably extremely boring. I mean don’t take me wrong, but I will be travelling for a while, but at some point you want some stability new challenges that give you a desire to be awake in the morning and do good things…
Will you start a new company? will you become an investor?… In my personal situation and depending the amount I will travel a bit more, I say a bit more because already my job let’s my travel around 2 month per year which is great for me. Then maybe keep developing some personal projects, small investments and work as a technical advisor…sounds funny.
How much I will get NET??!?!
BE AWARE! Taxes. Depending on your country and the amount you are getting , you can lose up to 50% of the total of the sale. So you make a great deal and you get yourself 3MM, probably you will get into your bank account around 1.8MM or less, once more depending on your country and taxes regulations.
Why writing about this now?
Last 12 month I got 3 offers to buy Open Classifieds, none of them enough for me. But for them more than enough. I respect the offers and as they offered them I rejected them or i told them an amount from which I will sell my kid and with some conditions that he will survive.
I have emails literally telling me I was crazy. Good for them I AM CRAZY and they are unprofessional.