Selling my web design company

selling web design company

[PanamaVR4]

A client of ours is interested in buying my web design company. They are a full-service advertising agency who wants to expand and bring web design in-house. They see value in us because our staff has diverse experience in web-based applications, multimedia, and print design. I was wondering how I determine our selling price and value. We have been in business three-years and have experienced consistant growth and the only carry-over expense would be salaries. Any help is appreciated. Thanks!

[Paul in South Africa]

A general guideline to start with is 3 to 5 times net income.

[JonB]

paul,you mean mean monthy net income or yearly? Or 5 times on how much you made money with you website so far?

[ncw164x]

You normally find that the figure is based on annual income, (gross or net turnover) but this can vary with different types of businesses. Bottom line is how much is the purchaser prepared pay, has the business got any assets, does it own the office building or not, has it got any liabilities

[Paul in South Africa]

I meant annual net income. Generally some kind of value would be attached to the assets (if any) which would then be added to this figure and the amount of any liabilities would be deducted from it. At the end of the day the value of any business is what a willing buyer is prepared to pay and a willing seller is prepared to accept.

[EliteWeb]

It comes down to the value of your company from what you make, what you plan to make, the amount of income coming in each month and how much you would be happy with selling it for. I do my website designs from my house so I have no overhead so my price would be cheaper than someone with employees and a business office.

[PanamaVR4]

What they are buying is the name, the staff, the clients, the equipment (computers, software, furniture, etc.), and the reputation. I was going to try to get one year gross sales, because they will be able to their money back and gain about a 20% profit within one-year at our current growth rate. Just a thought?

[Shane]

One years profit is too cheap. See an account or a registered business evaluator for advice.

..... Shane

[korkus2000]

I agree totally with Shane. 1 year gross is definitely not a good price. I would get professional advice. You will see that the advice in this thread will be on target with a normal brick and mortor. Don't worry about them making it back. How they run it will be the deciding factor on that.

[EliteWeb]

If you sold it for one year gross you wouldn't make a profit. Think of all the leg work you've put into it starting it up, getting it off the ground and making it profitable. Id buy it for gross one year just to know years after it would make me money ;)

[minnapple]

Beyond the selling price of the company, you should be paid a monthly consulting fee during the transition of the company.
An account can be set up so the consulting fees are paid to you, regardless (sort of) of the new owners future financial situation.
Minnapple