Quote: (06-03-2015 04:29 PM)jamaicabound Wrote:
Hey guys, curious if anyone here has ever sold a business? I'm looking to sell my ecommerce business. I had a couple questions...
1. Is it worth getting a valuation done by an accountant? I hear this can cost 5k to 20k and at the end of the day I imagine the other side will either want the same done or will lowball me so is it even worth getting that done?
2. What's the best way to find a buyer? Should I hire a broker? Put an ad up on a site? Contact my competitors?
My business did about 330k last year, typically I think it would be 3-5x earnings but I'm in a "high risk" I guess you could say industry so I'm getting a little over last years earnings would be more than generous.
Curious for any tips or advice from anyone who has sold a business.
1. Probably not. I have never done a formal valuation for a client looking to sell their business because it is pretty much pointless. Most industries have pretty standard earning multipliers, so it doesn't make much sense to pay for a valuation.
2. Broker will typically cost you 10%, which if you don't want to do any of the work yourself may be worth it. It is pretty expensive though, IMO. Posting on bizbuysell and websites like that are good idea. Also, contacting competitors is another great idea. That probably accounts for 90% of businesses sold. Brokers may have a mailing list that they spam to, but that is pretty much all you would be missing out on. Make sure you get a nondisclosure agreement before you show your sales booklet to anyone. You will want to put that together. It is a less then 10 pages has some historical financial info, info about your business, like product and customer concentrations, markets, product details, but nothing specific someone could use to knock off your business.
Just to be sure when you are saying earning you are talking about profit and not revenue, correct? Most businesses for sale will sell for a multiple typically 3x (though it depends on the industry) of what they call adjusted EBITDA. Where any benefits or owners comp are added back, also. I usually advise any of my clients to spend 1 year before selling to work on a shoestring budget and optimize their profits, to get the best return, thought that may not be feasible in your situation.