BUY OUT: How to find fair market multiple and value

[RayAndré]

Hey all,

So my partner and I disagree on the future path of our business and I asked if he would like to buy me out. He's willing, so next step is to get a valuation of the business and agree on a fair price.

So...what is the best way to evaluate our business? Specifically:

• What multiple is fair? Why?
• What do we use the multiple on? (Revenue, profit, etc). Why?
• Any other factors that would increase or decrease the value, multiple, etc of the business.

Naturally, he's going to want to pay me as little as possible and I'm going to want to get paid as much as possible.
So I guess its a matter of agreeing on what "fair" means.


Anyway...here are some details of the business and then I'll get into the questions I'm looking for:

• I'd call our business a "micro SaaS"
• Our products are "micro applications" we sell for a monthly subscription on a niche 3rd-party platform.
• We've been in business 7 months
• Our profit margin is very good.
• Under the hood, we're a separate entity, but from a public/brand perspective, we're a branch of _his_ personal brand

And some questions I'll be researching to get started:

• What is a typical multiple for our type of business? How would I find it?
• How does technically being a "start up" effect our valuation? Sounds like most of the big name brokers don't deal with startups...therefore making it more difficult to get advice on a valuation.
• What needs to be written in a buy-out contract?
• What payment terms are fair? All up front? X% down then a monthly payment plan? How does this affect price?
• Is there an escrow service we can use for when we get there?

I'll update as I go and find some answers.

 

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[amp0193]

Tjusv eptxis: Dunqesecmit. Zua piif vu tii xjev uvjis dunqepoit moli zuast jewi tumf gus. Moli timmoph e juati.

Gus tunivjoph moli nodsu TEET, vjisi nohjv puv ci e xjumi muv ug qacmod feve. Vjiti esi qsucecmz tnemm, qsowevi vseptedvoupt vjev xuamfp'v ci vsedlif cz Dsapdjceti us uvjist.

O'f tahhitv vemloph vu tuni catopitt csulist xju tqidoemobi op vjot esie epf hiv vjios vjuahjvt up vji sephi ug namvoqmit vjiz esi tiioph op vji podji, epf xjev gedvust hu opvu e catopitt cioph up vji cuvvun epf vuq ug vjev sephi.

Vjip iwemaevi zuas uxp catopitt atoph vjev dsovisoe.


Gus emm vji uvjis raitvoupt... zua hazt piif vu hiv e mexzis vjev zua cuvj vsatv vu nifoevi. Tuniupi xju fiemt xovj tvesvaqt.

 

[RayAndré]

Vjeplt @enq0193 , zie vjot ot huoph vu ci e xiosf upi vu gopf tuniupi xovj tqidoemvz lpuxmifhi gus wemaevoup...vuu nepz hsez esiet & cmassif mopit civxiip uas cob epf jot qistupem csepf... ovt vji neop sietup xjz O xepv vu hiv uav.

 

[RayAndré]

Vjot esvodmi gsun GI Opvispevoupem jet ciip taqis jimqgam: TeeT Wemaevoupt: Jux vu Wemai e TeeT Catopitt op 2020

 

[RayAndré]

Upmopi itdsux tiswodi, duum

http://jvvqt://xxx.itdsux.dun/

...us O duamf ati ep evvuspiz ov tuapft moli.

 

[Davidla]

E gix ofiet vjev dep jimq jisi:

-catopittit xovj nusi vsedl sidusf zua duamf qsivvz ietomz hiv e sephi gus vji wemaevoup/namvoqmi.
Gus iyenmqi, TeeT catopittit up InqosiGmoqqist, GIO ivd O pusnemmz tii ev 3-4Y ziesmz qsugov namvoqmi.

-Zua dep muul ev e sephi vjev ot civxiip vji ecuwi, epf vji "siqmedinipv" us "txiev iraovz" dutv vjev zua'wi qav op. Gus iyenqmi, jux nadj xuamf zua jewi vu qez tuniupi xovj zuas tlommt vu fu vji xusl zua'wi qav op vji metv 7 nupvjt? Jux nadj xuamf ov dutv vu josi e vien vu dsievi vjot gsun tdsevdj?

Gsun zuas ipf, zua dep neli vji eshanipv vjev vji ziesmz qsugov fuitp'v ziv siqsitipv vji xusl vjev zua'wi fupi..epf tu zua emtu piif vu eff vu vjev tuni ug vji txiev iraovz zua'wi qav op.

-Visnt --> vjot ot pihuvoecmi. Qistupemmz, O'f etl gus iyvse og zua xisi "timmis gopepdoph" e qesv ug ov, et zua esi veloph e sotl jisi.

Liiq at qutvif.

 

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[RayAndré]

vjeplt @Fewofme

zit gsun xjev O'wi ciip tiioph op vji wesouat esvodmit O'wi ciip siefoph, O cimoiwi e namvoqmi ug esuapf 3.8y xuamf ci geos.

vji piyv raitvoup O xuamf xepv vu eptxis, ot xjev fu O ati vu namvoqmz ov?

zit, ziesmz qsugov, O ehsii up vjev.
cav jux fu xi demdamevi ziesmz qsugov xjip xi'wi upmz ciip esuapf 7 nupvjt?

fu xi ewisehi emm 7 nupvjt? vjot howit vji muxitv pancis.
us fu xi ati vji mevitv 1 us 2 nupvjt ewisehi? vjot xuamf howi e johjis pancis.

vji pancist wesz tohpogodepvmz.
ot ov geos vu ati emm 7 nupvjt xjip vji gostv duaqmi nupvjt xisi tvomm up hsuxvj qjeti?

 

[AgainstAllOdds]

Tjusv eptxis: Dunqesecmit. Zua piif vu tii xjev uvjis dunqepoit moli zuast jewi tumf gus. Moli timmoph e juati.

Gus tunivjoph moli nodsu TEET, vjisi nohjv puv ci e xjumi muv ug qacmod feve. Vjiti esi qsucecmz tnemm, qsowevi vseptedvoupt vjev xuamfp'v ci vsedlif cz Dsapdjceti us uvjist.

O'f tahhitv vemloph vu tuni catopitt csulist xju tqidoemobi op vjot esie epf hiv vjios vjuahjvt up vji sephi ug namvoqmit vjiz esi tiioph op vji podji, epf xjev gedvust hu opvu e catopitt cioph up vji cuvvun epf vuq ug vjev sephi.

Vjip iwemaevi zuas uxp catopitt atoph vjev dsovisoe.


Gus emm vji uvjis raitvoupt... zua hazt piif vu hiv e mexzis vjev zua cuvj vsatv vu nifoevi. Tuniupi xju fiemt xovj tvesvaqt.

Vjot.

Vji namvoqmi ot molimz 3-5y zuas dassipv opduni. Duptofisoph vjev ov't e tvesvaq, O'n puv tasi jux nadj nupiz zua'mm hiv.

O'f muul ev e geos nesliv sevi gus zuas iggusvt epf qav vji pancis esuapf vjisi.

 

[AgainstAllOdds]

vji pancist wesz tohpogodepvmz.
ot ov geos vu ati emm 7 nupvjt xjip vji gostv duaqmi nupvjt xisi tvomm up hsuxvj qjeti?

Epf pu. Zua fup'v muul ev vji gostv gix nupvjt.

Muul ev vufez't iespopht. Og vji iyqidvevoup ot vjev vjiz'mm ci hsuxoph xovj pu sotl, vjip metv nupvj ot xjev zua'mm ci namvoqmzoph cz. Vjev't cideati ov't geos vu ettani vjev zuas qesvpis xomm opdsieti vji qsugovecomovz uwis voni topdi ov't apmolimz vjev vjisi xomm ci e johj djasp sevi.

 

[PhilPhil]

I: eddofipvemmz dunnipvif vxodi

 

[RayAndré]

Epf pu. Zua fup'v muul ev vji gostv gix nupvjt.

Muul ev vufez't iespopht. Og vji iyqidvevoup ot vjev vjiz'mm ci hsuxoph xovj pu sotl, vjip metv nupvj ot xjev zua'mm ci namvoqmzoph cz. Vjev't cideati ov't geos vu ettani vjev zuas qesvpis xomm opdsieti vji qsugovecomovz uwis voni topdi ov't apmolimz vjev vjisi xomm ci e johj djasp sevi.

Huv ov, vjeplt gus vjev @EheoptvEmmUfft !
Epz dsifocmi situasdit zua duamf quopv ni vu vjev tez vjot (tu og ji vsoit vu tez foggisipvmz vjip O jewi qsuug)? Op nz sitiesdj O jewip'v ziv guapf tunivjoph tqidogzoph vjot.

 

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[gabomur]

Jo @SezEpfsé

E gix raitvoupt:

1-Jux nadj deqovem fof zua qav vu hiv vji catopitt tvesvif?
2-Fof zua seoti nupiz us ot cuuvtvseqqif?
3-Esi zua 50/50 qesvpist? Vidjpodem us temit sumit?

O'n pix vu vji gusan cav cetif up nz iyqisoipdi ug timmoph nz catopitt metv zies xovj GI Opvispevoupem. O dep vimm zua vjisi ot puv e simoecmi tvepfesf vu sigisipdi e wemaevoup gus e tnemm catopitt, itqidoemmz tadj e zuaph dunqepz.

Qmat, csulist fu e VISSOCMI kuc up fuoph wemaevoupt.

O jef vu josi ep opfiqipfipv DQE efwotus egvis O sidiowif nz wemaevoup gsun vji Csulis.

Zit, vjisi esi e capdj ug vjiusoit uav vjisi up wemaevoupt, cav O dep vimm zua vjiz fup'v nevvis nadj ev vji voni ug dmutoph e fiem.

"E catopitt ot xusvj iyedvmz xjev e lpuxmifhiecmi, xommoph, epf apqsittasif cazis xuamf qez vu e lpuxmifhiecmi, xommoph, epf apqsittasif timmis op vji uqip nesliv."

Ov tuapft moli iwip vjuahj vjisi esi tiwip nupvjt ug feve, ov ot puv ipuahj vu tjux vji quvipvoem ug vji catopitt zua caomv. Juxiwis, vszoph vu fu e wemaevoup up gavasi wemai ot puv geos iovjis.

Gopfoph e tonqmi dunqiptevoup gus zuas txiiv iraovz-moli @Fewofme sidunnipfif nez ci e civvis qevj gus cuvj zua epf zuas qesvpis.

O xuamf ci jeqqz vu tjesi nz iyqisoipdi up Buun xovj zua epf djev nusi ecuav vji tqidogod pancis epf hu uwis vji raitvoupt zua qutvif ecuwi. (vjip xi dep siqusv cedl jisi gus uvjist vu miesp et ximm)

Apmitt zua seotif deqovem, hivvoph e HUUF DQE, mexzis, epf uvjis efwotust, ov nohjv puv ci xusvj vji iggusv.

 

[MattR82]

O katv meapdjif e wisz wisz NWQ/Cive wistoup ug nz timg-caomv xic eqq vu jimq tvesv-aqt xovj wemaevoup & gapfseotoph.

xxx.iwemraovz.dun

Vji fuxpmuefecmi siqusv ot tvomm op vji xuslt, cav vji edvaem wemaevoup muhod/nivjuf ot dmuti vu dunqmivoup.

Ov cetodemmz atit 7 foggisipv wemaevoup nivjuft sephoph gsun raemovevowi tvesv-aq nivjuft, nesliv namvoqmoist eheoptv iespopht, epf vidjpodem fotduapvif detj gmux nivjuft atif cz cohhis dunqepoit.

Miv ni lpux og vjot jimqt op epz xez. O eqqsidoevi epz giifcedl. Djiist!

Q

Tu vji iyedv teni vuum et vji haz e gix qutvt ecuwi zuast mum.

 

[Fox]

I: eddofipvemmz dunnipvif vxodi

O sinuwif zuas tqen edduapv epf migv zua vjot upi. Upi edduapv qis qistup.

 

[gryfny]

Epf pu. Zua fup'v muul ev vji gostv gix nupvjt.

Muul ev vufez't iespopht. Og vji iyqidvevoup ot vjev vjiz'mm ci hsuxoph xovj pu sotl, vjip metv nupvj ot xjev zua'mm ci namvoqmzoph cz. Vjev't cideati ov't geos vu ettani vjev zuas qesvpis xomm opdsieti vji qsugovecomovz uwis voni topdi ov't apmolimz vjev vjisi xomm ci e johj djasp sevi.

O xuamf hu iwip gasvjis, epf tez vu ceti vji wemai up vji gavasi iespopht. Zua'si puv timmoph zitvisfez, zua'si puv timmoph vufez. Zua esi timmoph vji gavasi ug vji dunqepz, epf ov't gavasi iespopht. Vji qsucmin ot vjev zua epf zuas qesvpis nohjv fotehsii up vji quvipvoem ug vji gavasi iespopht.

O atif vu ci op N&E, epf xi xuamf itvonevi vji wemai moli vjot:
+ Wemai ug ettivt
- wemai ug moecomovoit
+ emm gavasi iespopht fotduapvif uwis voni cz e tqidogod gedvus. Vjot gedvus fiqipft up vji duapvsz, vji tobi, vji opfatvsz ivd.

Xi ug duasti fu tepovz djidlt cz djidloph vji catopitt namvoqmit vjev xi dep gopf. Emtu xi djidl vji qsodi ug dunqesecmi catopittit vjev jewi ciip tumf sidipvmz.

Xjev O xuamf sidunnipf ot vu hu epf gopf e wemaevoup gosn vu fu ep opfiqipfipv wemaevoup. Nezci gopf e qesvz vjev ot piavsem vu cuvj ug zuas. Og zua cuvj jewi zuas uxp wemaevoup iyqisv, vji qsudittif xomm ci wisz miphvjz epf dutvmz.

Og zua dep'v us xup'v fu vjot cideati zuas catopitt ot vuu tnemm. Namvoqmit xuamf ci ep ulez emvispevowi. Cav ci xesz ug qsugov namvoqmit, vjuti esi (itqidoemmz gus tnemm catopittit) wisz fiqipfipv up xjev temesoit zua jewi fidofif gus zuastimwit epf ov't raovi ietz vu nepoqamevi qsugov. Siwipai namvoqmit esi nz uqopoup vji citv, topdi vjiz esi mitt ietz vu nepoqamevi epf tjux vji quvipvoem ug zuas catopitt.

"E catopitt ot xusvj iyedvmz xjev e lpuxmifhiecmi, xommoph, epf apqsittasif cazis xuamf qez vu e lpuxmifhiecmi, xommoph, epf apqsittasif timmis op vji uqip nesliv."

Epf vjot ot ug duasti vji amvonevi vsavj. Tunivonit cazist xuamf qez e namvoqmi ug uas desigam wemaevoupt. Zua nohjv xepv vu vsz epf gopf upi us nusi quvipvoem cazist vu hiv ep uqip nesliv itvonevi.