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Ask YC: How would you sell your business?

19 points by groovyone ↗ HN
Hi. We have an existing software business (provision of encryption software) that brings in a good level of regular revenue but the income at the moment isn't stratospheric (We're bringing in around $120k per year). In the right hands this business could increase, but my main goal is I'd like to concentrate on a new startup and don't feel I can do both. I appreciate that most people wish to sell their business for millions, but if you were after something in the region of $400-$500k where would you look? How would you do it without causing problems (ie people thinking you're up for sale)? This is not something I've ever done before so would really appreciate any advice from anyone who has done this kind of thing before.

Thanks for any input

26 comments

[ 4.4 ms ] story [ 69.4 ms ] thread
bcater
NOTICE: The following message contains hearsay.

I heard that Justin from Justin.tv sold his first startup on eBay, but that could be entirely fictional. You might want to e-mail him to find out.

[deleted]
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thorax
Inc magazine has a section for advertising deals like these, I think. They at least feature one of these each issue.
ericb
When people post sites for sale in the sitepoint.com forums, to prevent the general public from stumbling across the sale, they usually use a tinyURL pointing to the site and avoid using the site name in the description text. This prevents the sale post from appearing in most search results. You could also check out the robots.txt for wherever you list.
inovica
Would someone sell a site for this kind of money on Sitepoint? I've seen $15k-$30k on there, but not an amount as high as this. A quick glance is that even in the 'premium' category most are in this ballpark or less

Edit: sorry, don't mean to offend. Just curious if you know of any that have sold for this amount

ericb
No offense taken. In their premium section I have seen some things on for near this neighborhood (the lower part, though). My bigger concern is that sitepoint is about sites for sale rather than businesses for sale. To that end, I wasn't necessarily suggesting sitepoint so much as describing how people kept their privacy. If someone knows of a sitepoint equivalent for technical businesses, please post it--I'd like to check it out.
nikiscevak
I would second the Sitepoint premium marketplace.

Here are a few that are in similar ranges:

http://marketplace.sitepoint.com/auctions/34096

http://marketplace.sitepoint.com/auctions/34080

Having tracked the marketplace for the last few months there are a fairly regular stream of companies that have $10-15k in revenue.

They tend to be forums and have a very webmaster skew. So I am not sure there would be software buyers but it's worth a shot.

This forum was recently sold on sitepoint i believe too: http://v7n.com/

utnick
Curious... what kind of expenses do you have selling software that the income on 120 revenue is bad?
bmaier
Looks like his gross revenue is higher from what he's saying and that 120k is net?
groovyone
$120k is our turnover. Actual expenses are very minimal (hosting costs, $500 Adwords and a few others) as we do other things - time spent on it is around 1-2 hours a day between us. If we all pulled a wage purely from this though then it would be quite low. My main thing is its taking up brain space now and I want to be able to concentrate on my latest idea.
immad
Kiko, previous startup of justin.tv founders, was sold on ebay.

But I would not advise that for your startup, since I don't think you would be able to get enough attention to it from the right people.

I think the best idea is to figure out who the best people to buy your startup are. Either because they can leverage the product best or because they are your competitors or because they have enough money and interest in your space. Then start conversations with them.

Some people use investment banks or hired investment bankers but you need to be looking at a higher valuation to interest those.

justin
The reason we sold Kiko on Ebay is because big companies we were talking to would have been willing to consider buying the company for a bit more, but only if Emmett and I went to work for them for some n years. Because (Total Amount of Money) / n wasn't very much, we said "fuck it" and just went for broke, so that we could work on our much more awesome idea, which turned out to be Justin.tv.
emmett
We sold Kiko on eBay for $250k, which is around the neighborhood you'd want. The issue is that for that to work, you need to get a lot of attention. Since you have real revenues, I'd consider going to a boutique investment bank and seeing if they'll help you sell it. At the very least, even if they won't sell it themselves, they will probably tell you where you should sell it.
subwindow
I'd second going to an investment bank or business broker.

This kind of revenue is similar to what a lot of small sandwich shops and retail stores get. While your business is different, there are many groups out there comfortable with deals of this size.

staunch
> We sold Justin.tv on eBay for $250k, which is around the neighborhood you'd want.

Hilarious kind of mistyping there. Obviously that was supposed to read "We sold Kiko on eBay..."

mattmaroon
If that's not a typo, I know some investors who will be seriously pissed.
zkinion
Heh, I found this thread off of vwag.

Eh, give him a break. He's probably been coding all day.

justin
$258.1k, let's not short change ourselves :D
emmett
And don't forget the $3000 in consulting fees charged for integration!
lux
Off topic, but I read your profile description and I had actually thought of doing something similar a few years ago. At the time bandwidth was still prohibitively expensive though. Nowadays, I don't think that's been adequately solved yet, and it would be much more realistic with services like AWS now. Good luck with that! :)
groovyone
Thanks. I agree with you, though we've done 'ok' so far. Feel free to get in touch if its an area you're interested in. Email address is now in profile
lux
I would totally be interested, but I'm already way over my project limit right now ;) I'm running one company by day and I'm launching another in about a month that we've been working on since last September.

I'd love to see a beta though when you guys get something online! My email is in my profile too now. I'll keep an eye out either way :)

groovyone
Thanks to everyone for their input so far. I now have a few things to look at and research - the main thing is to move it forward. If I can sell it, then it will give me additional capital that will be useful, and another company who can market my existing product better than us can take it forward. Thanks once again - I really appreciate everyones comments
weezus
You might be able to sell it to a gold farmer and then cash out the gold IRL.