| Can I ask a little more please? How much of the company did you own when you sold it? How did the sale happen - did someone just turn up and offer you money, or did you go find a buyer? Was there negotiation from a higher price down to $10M? Did they buy the entire company from you or just buy the software assets? How long did the sale take from when the buyer turned up till money in your account? How much money did you end up with after paying tax on the sale? What did you do to celebrate? What did you do next - another business, get a job, sit at home watching TV? Would you have handled the sale process differently if you could do it again? |
I’ve seen owners (either single or partners) who own between 5% and 100% of the business when they sell it. Unfortunately, most of them seem to own between 5 - 35%.
Most of the sales I’ve been involved with are the company trying to find a buyer. However, occasionally a VC will flat out ask if the company is for sale. Though it’s probably 10 to 1 in my experience.
There’s usually some level of negotiation. There is a “SAAS multiplier”. Right now the VC I consult for looked at about 3 - 5 times EBITDA. This gives you a healthy negotiation range.
People should absolutely consult an accountant and an attorney when figuring out what to do with the money they make. Often if you handle it right you can pay significantly fewer taxes. Taking stock or equity is a good way to handle reduction of those tax burdens.
I’ve seen people celebrate by buying multiple very expensive cars. A house on the beach in Hawaii. Huge trips. I’ve seen people blow huge amounts of money very quickly. The fastest was two guys who blew through $3,000,000 each in 6 months. It was stupid.
Most of the sales i have been involved in kept the former owners in a working capacity at the company.
I hope this helps a bit. Obviously it’s just my observations.