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by danieltillett 3169 days ago
No I am asking a genuine question. My experience is all buyers want to pay 1x to 1.5x of the after tax profit after some massive owner salary has been subtracted.

From a financial perspective it almost never makes sense to sell unless you have to get out today. If you have a good business that is earning good money then just run it out for cash. At worst take your best employee, give them 10% of the business, and let them run it.
3 comments
patio11 3169 days ago
Some prospects have that understanding of what is reasonable, just like some startups really think they can find experienced engineers in SFBA for $60k and 10 bps, but the actual buyers who successfully consummate transactions definitionally do so at market prices, and market prices for small SaaS apps are 3~3.5X SDE (approximately profit w/ no deduction for taxes or owner salary), with deviations above and below based on individual circumstances like you would expect for any complex sales.

I've done it twice. FEI (the broker I used, linked by others) was very effective at bouncing people with very unreasonable expectations of market prices; I felt like my time was not wasted with non-serious parties (relative to my prior expectations of how many there would be).

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klttunets 3169 days ago
This hasn't been my experience at all - I'm sorry you haven't had better offers. If you haven't already, I suggest contacting the brokers mentioned on this page (FE International, Pixel Paycheques) and see if they can get you better deals
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danieltillett 3169 days ago
I am not really looking to sell, this is just my experience of approaches I have had. My favourite was the offer I got which came with a three year earn out that was half my expected profit over the timeframe. Really.
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enraged_camel 3169 days ago
>>From a financial perspective it almost never makes sense to sell unless you have to get out today.

On the contrary, you should never wait to sell until you have to. That just puts you in a very weak position and ensures you'll be selling it for pennies on the dollar.

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danieltillett 3169 days ago
Only if the other side knows this :)
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