[bluelu]

Normally, you won't sell to a strategic if you have not have had a business relationship with him before and he sees significantly value in your business.

As for private Equity, it probably depends on the fund, but I would assume most of them look for growth companies.

So then the question is who is left? Maybe another entrepreneur looking to diversify, then maybe you could try at one of those market places where you can advertise your website. However I wonder if you are not to big.

Evaluation depends on where you are located (US, Europe, etc..), target market size, competition, metrics (growth, churn, potential), Software as a service vs services/consulting, etc... If you are not selling a product (Saas), or you are not growing (which seems to be your case), be prepared to be valued at a multiple of your earnings, and not total revenue. As for growth, everyone will look at past growth to extrapolate future growth. If you have no past growth, no one will believe you that you will grow your business next year 50% more.

As for the fees, I would expect you to pay a fee when you bail out because the price is too low, or decide not to sell, as they have also done work on their side. Otherwise no one wants to work with you anymore as well in the future. Still you should increase their revenue share the higher they sell. Don't expect though that they know all the companies to target, or have all the connections to those companies.

Most buyers will also require you to stay onboard for 2-3 years.

You should provide more details about region, type of business, market, growth rate, then you can get better replies.

[throwawaymna]

For sure, past growth will of course be looked at to gauge future prospects. Our growth has historically been driven largely by branding initiatives on our end, but our user retention is also really high. So all along we've tended to have spurts of growth around successful campaigns, followed by consolidation periods where it levels out. But I've never targeted maximum growth at any cost, but rather sustainable growth while maintaining a healthy profit margin, so it tends to come in bursts as profitable marketing opportunities present themselves. I think we have enough of a track record of those that a strong possibility of future growth is a reasonable assumption, but of course that would be a tougher case to argue than a company that has consistently grown X% per month for years.

Regardless, at this point I'm not looking to sell right away, just beginning to consider the possibility of selling at all. And one of the early steps in that process would be finding representation for the shopping and deal process, hence looking into M&A firms.

There are actually a number of potential strategic acquirers that we have or have had relationships with, so we would certainly consider those, but regardless I'd want someone representing our interests and shopping us around too. I've been approached by a number of such firms over the years, but don't really have strong criteria for narrowing down who we might want to work with if I did decide to pursue a sale, so that's what I'm trying to work out now.

[bluelu]

You should take a holiday and really think about what you would like to achieve next and why you want to sell.

If your decision is to sell (not now, but it will take some time...), then talk to 2 or 3 of such companies, explain your situation, and ask them how they think you can maximize your earn out at the end (should you invest aggressively, expand into new markets, what are the KPIS which are relevant, etc...), and when you should go to market. Sure you will have to pay for this advice, but you can certainly afford.

And then you decide if you want to do this and invest/grow the company, or let the profits roll based on their input, and then start a process one year later (or whatever they say) when you have shown track record.