Selling a business - how much

differentworld

I have an online business I have been running from home for the past five years while the children were at school. I started it from scratch.

Kids are getting bigger and I want to get back to work outside of the home.

I have the niche username and its been great as a home business. I work about six hours a week but need to be available to answer the phone the rest of the day.

The only time it gets busier is during the peak season when I work most mornings.

I turnover over 50K and make a profit of between 12k and 15k.

There is the opportunity to increase profits but I don't want to carry stock so I buy locally (EU) instead of direct from China thus reducing my profit and storage space needed.

There is huge opportunity to expand this business from online to on the road.

Its a b2b business.

Any idea how to calculate what its worth.

Thanks

overthenest

let me know what you intend to sell it for....

Dutchie

Businesses are normally valued via a multiple of EBITA.
Are all of your Tax and legal affairs in order?
What industry/markets do you operate in?

differentworld

All taxes etc are in order and managed by an accountancy firm.

I don't know what EBITA is

Edit to say I don't really want to name the market but its growing.

Dutchie

EBITDA= earnings before interest, taxes, depreciation, and amortization.

PM if you want; my company is actively involved in acquiring businesses that fit our business model.
Thanks.

differentworld

Can i ask what is the normal multiple of the EBITA

Thanks,

Susan

SolarNexus

I'm not speaking from experience so take this with a pinch of salt, but I've always heard that you price a business based on what it earns within a year. So if it earns 15K profit in a year, then that's the price you should charge.

During boom years you would then multiply that by 1.5 to 3 to get your final price, but I think those days are long gone.

differentworld

Thanks SolarNexus, that gives me an idea.

Thanks for the pm's but I am not advertising the sale on this site, just getting an idea of value

antoinolachtnai

I presume that profit figure includes what you pay yourself? If it doesn't, then you really need to adjust the ebitda figure to account for that.

On the other hand, the business clearly has some growth potential.

The most likely thing to do with a business like this is to sell it to somebody in the same business or a closely related business on the basis of an 'earn out', i.e., you get paid if the business sustains that level of business or meets defined growth targets. This would probably mean that you would continue to play some role in the business.

If the business can really be grown to a multiple of current profitability, you could negotiate to get a share of this growth over time.