[davismwfl]

Selling a consulting or web dev type business is different then selling a product based business. With some rare exceptions when you are selling a web dev business you are selling your client list, current and future planned work etc. With that, many times comes a set of developers that work for the business etc, but the primary payment is for the "book of business".

So the valuation isn't based on profit/loss so much as client list, client quality, avg client annual value and repeat business etc.

With the numbers you've shared, likely we are talking 10's of clients per year, or if it is higher then they are likely low value clients, meaning your book of business isn't worth much. I mean no disrespect, just trying to be honest as I have been through this.

I'd get the interested party to put a number out that they are thinking. Give them some basic info and let them propose a value and then see how you feel. Sometimes they need the business history bad enough to pay for it. Sometimes they have a need to angle into a few clients that you have and so they'll somewhat over value the business based on their opportunity.

Obviously the more sophisticated the business the more I could be wrong. If you really want an idea without sharing any details with the potential acquirer get with a business broker and have them do a non-binding quick eval to give you a ballpark. I've done that and paid a small price for it since I wasn't going to use them most likely, but it usually is worth the small cost (relative to the size business).

[bbertucc]

cool. how does a business broker value a company? i default to transparency, so would just hack it myself if possible.

[davismwfl]

Similar to real-estate to a certain degree. A lot of it is based upon prior experience and having sold like businesses usually. Many also belong to trade groups or similar organizations that provide deal information that they can look up anonymized deals and find like values etc.

It is hard to hack your way through this one if you want accurate information to maximize your valuation.

I'd also encourage the potential buyer to value the business first, with providing only some basic data points, and that way you know if there is even a real opportunity for both parties. Cause if you are thinking you are getting some multiple of revenue (or net) and they are saying the book of business is worth $50k, you could be off by an insurmountable number and better to know that earlier then later.