[jamaicabound]

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.

[VolandoVengoVolandoVoy]

(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.

Why would you sell an ecommerce business that's netting you 330K in profit a year? Couldn't you just hire someone to run it for you if you are bored of it?

[TheFinalEpic]

(06-03-2015 04:31 PM)VolandoVengoVolandoVoy Wrote:  

(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.

Why would you sell an ecommerce business that's netting you 330K in profit a year? Couldn't you just hire someone to run it for you if you are bored of it?

Pull the money out, start up other ventures. You can do quite a bit with 700kish.

[jamaicabound]

(06-03-2015 04:31 PM)VolandoVengoVolandoVoy Wrote:  

(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.

Why would you sell an ecommerce business that's netting you 330K in profit a year? Couldn't you just hire someone to run it for you if you are bored of it?

I've lived this business for 3 years and quite honestly am just completely burnt out.

Add to that I've kind of had a cakewalk using Paypal and now that my Paypal account is getting shutdown I found a merchant account but am super overwhelmed learning gateways and how to configure it all to my site.

I do a bit of blogging and stuff but I'm not a progammer, not a web designer, I hate dealing with Indian web design companies which in my experience is the only way not to pay 20k for a simple ecommerce site.

I kind of feel like I've taken this business as far as my skillset will allow. I imaigne someone else could probably double sales with the right people.

Quite honestly I just want to cash out, buy a van and go travel for the next 6 months and think about my next venture. On top of running my business my girl just finished fighting breast cancer for the past year and I'm just ready for an extended vacation its been a stressful past 2-3 years for me.

I'm kind of a worry wort and just due to the nature of my business it's always going to be issues with payment processors and stuff and I just don't have the nerves for it anymore. At one time I thought it was fun figuring out solutions and tackling everything thrown at me but I'm just over it at this point.

[jamaicabound]

(06-03-2015 04:34 PM)TheFinalEpic Wrote:  

(06-03-2015 04:31 PM)VolandoVengoVolandoVoy Wrote:  

(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.

Why would you sell an ecommerce business that's netting you 330K in profit a year? Couldn't you just hire someone to run it for you if you are bored of it?

Pull the money out, start up other ventures. You can do quite a bit with 700kish.

I have a partner so only half of what we've made is mine as well as half of what we sell for but still thats a nice little bit of working capital to move onto the next project after a well deserved break.

[TheFinalEpic]

Best of luck my man and congratulations on getting the business to where it is today! This thread needs someone like Gringuito to help you out, guy knows all there is to know about the business world and its proceedings.

[Harvey Specter]

(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.

[Easy_C]

Go with Specter. He seems to know what he's talking about.

Catch is, you need to know how to value the businesses in your sector relative to your EBITDA, enterprise value, and net debt.


If none of these terms are ringing a bell then you probably should get a professional involved(although a CPA isn't what you need).

[Gringuito]

Jamaica, how much of the business is you (and your partner) personally working? Do you have a staff that handles all the day-to-day work while you are hands off? If you're personally required to be around to ensure the profits, don't be surprised by an offer that is a payout over time with you still working at the company. You can sell a business (something that generates profits even when you're not working) but it's very hard to sell a job (a company that requires you working to generate a profit).

How is the company structured between the partners? Are both of you on the same page with respect to expectations of potential offers? When I read the OP it looked like 330k of revenue, not EBITDA. Can you give an idea of which?

A few thoughts on valuation. As Harvey said there are industry standard multipliers as a starting point. If you have a highly valuable customer list this could add to your valuation. There are cases when a competitor will pay more than normal if your company is underpricing them and your market share will be more profitable for them than it was for you. Also, depending on how you structured your company there may be some tax benefits (basis step up) that could increase your value.

[Tyler Belfort]

My go-to brokers are FE International. 10% commission, negotiable.

They understand online business better than any other broker I've used. This is probably more important than you're anticipating - having to school your offline broker on online business is the last thing you want.

Also, a good broker does more than 'spam a mailing list' as someone mentioned. They have real relationships with people you couldn't access otherwise. They will also fend off the hordes of time wasters you'd get from Flippa etc and those looking to rip your business model.

[Saladin]

(06-03-2015 04:37 PM)jamaicabound Wrote:  

I've lived this business for 3 years and quite honestly am just completely burnt out.

Add to that I've kind of had a cakewalk using Paypal and now that my Paypal account is getting shutdown I found a merchant account but am super overwhelmed learning gateways and how to configure it all to my site.

I do a bit of blogging and stuff but I'm not a progammer, not a web designer, I hate dealing with Indian web design companies which in my experience is the only way not to pay 20k for a simple ecommerce site.

I kind of feel like I've taken this business as far as my skillset will allow. I imaigne someone else could probably double sales with the right people.

Quite honestly I just want to cash out, buy a van and go travel for the next 6 months and think about my next venture. On top of running my business my girl just finished fighting breast cancer for the past year and I'm just ready for an extended vacation its been a stressful past 2-3 years for me.

I'm kind of a worry wort and just due to the nature of my business it's always going to be issues with payment processors and stuff and I just don't have the nerves for it anymore. At one time I thought it was fun figuring out solutions and tackling everything thrown at me but I'm just over it at this point.

So your business is making hundreds of thousands a year, and you're pissed off because you use shitty Indian web development companies instead of paying a reasonable rate for a proper website that will make your life much easier and save you a ton of stress. Saving 5 percent of your yearly revenue by scrimping on one of the most valuable parts of your business is completely worth the added stress of working with an Indian web development companies. Not to mention the far worse user experience your customers must be dealing with.

Have a good think about that.