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Best way to sell an online business? How to evaluate the value of only the online software you create?

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Biz2Credit LLC
New York County, NY

Hi,

The best way to value an online business is to see if there are any comparable in the marketplace. If the competitors have been funded by VCs etc, then it easier to use that as a benchmark. Normally it is a multiple and mix of revenues and EBIDTA and in case there is a regular stream of income then it becomes easier to value it.

Apr 8, 2010
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The BAF Group LLC
MD

It depends on the business. Are you asking one, or two questions? If the business is linked to the software, and the business is up and running, the software's value can be linked to the current business Cash Flow, in order to evaluate the Price. If the software is not operating the business, then you probably need to develop a Business Plan that suggests the potential for Cash Flow, which in turn suggests the Price.

If the business is operational, your best bet is to work through a Business Broker, who can effectively direct marketing activities toward potential Buyers. Such Buyers are in most cases not looking at databases such as this, for acquisitions. That is not always the case, but the key is to have mutiple, althernative Buyers, in order to increase the potential for the highest possible Price.

If the business is not operational, and you have software that has potential, then it is a tougher sale. The days of companies like AOL paying millions of dollars on a whim, for something that COULD be a good deal, are almost non-existant any more. Those companies effectively went broke on making too many deals, that way. Again, that is not always the case, but they are very rare. Moreover, you need to have your software protected by either Copyrights or Patents, be in position to show that the technology is extremely innovative, and that the Cash it can generate will do so quickly, and in huge volumes. The danger is that your presentation of such software can give a large company ideas of its own, and steal the process from you rather than buying it. You should start by seeing an attorney, to determine how to best protect yourself from that threat.

There are many more issues to contemplate. These are just some "shoot from the hip", first impressions. Without knowing details, it is difficult to give you much in the way of specifics.

Apr 8, 2010

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