Valuation at this size is rough, and sellers and buyers often start far apart. Real data points help both sides.
The usual method. A multiple of annual profit, or of monthly profit, adjusted for how risky and how transferable the business is. Revenue multiples appear mostly for fast-growing subscription businesses.
What tends to raise the multiple
- Recurring revenue with low churn
- Steady growth over a year or more
- Several traffic sources
- Little work each week
- Clean records and code that someone else can run
- A product that does not depend on the founder's name
What tends to lower it
- Revenue that is falling or lumpy
- One customer or one channel providing most of it
- A short history
- Dependence on a single platform's rules
- Messy books
- The founder doing work that is hard to hand over
Reply with, if you are willing:
- The kind of business
- Roughly the profit and the price, or the multiple
- When the deal happened
- What moved the price up or down in negotiation
Multiples shift with the market. Date your reply, and treat old figures with care.