Basic Math Help - Selling a Business

Discussion in 'Growing and Managing a Business' started by residual, Jul 12, 2010.

  1. residual

    residual
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    Hello BAF members!

    Question: How do I value my book of residual business? I am interested in selling my business in the next 12-24 months.

    Our company offers a marketing tool that is accessible via the web. Members pay in advance, on a credit card, monthly.

    For privacy purposes I do not wish to disclose our business (sorry).

    Our company has strong profit margins and our marketing plan is driving new customers into the business (and yes... we monitor our cost per acquisition, etc. and the marketing system is working).

    The business has no debt.

    Can you help point me in the right direction so I can put together a worksheet showing what the business is worth?

    I would like to begin approaching larger competitors and/or sell the business to someone that understand technology.

    How do I value my book of business? Do I take net profit, apply it to our growth model, build in attrition, costs, etc. and multiple that by ????? months ????

    If you can provide "general rule of thumbs" that would help me greatly build a SIMPLE model for us to shop around.

    Thanks BAF!
     
  2. Fergal

    Fergal
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    Welcome to Business Advice Forum residual, thanks for joining and asking your business question. I've seen a lot of online businesses sell for 10 to 12 times their monthly profit. However, it really depends on the business type and if you have a strong established business you might be able to sell it for a much higher multiple.

    There are lost of online businesses sold at Flippa.com. Have a look through their listings and look out in particular for businesses similar to your own. You will be able to see what types are selling and at what multiples of their profits they are actually selling for.

    Does this help you?

    Good luck with your sale, please note that you are welcome to promote your sale in our Buy & Sell Websites, Domain Names & Businesses section and please do let us know if you have any further questions.
     

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