Selling an Ebay business

Conjam · 08-07-2012 11:22pm #1

Hi all, I'm new to boards and came here to get some advice and opinions.

I started a business two years ago when i was in first year in college to make some extra money. The business is a limited company and is also vat registered although turnover is not in excess of 75k i still registered for vat as it looks more professional.

In its first year i made a profit and it's on track to make a profit again this year. I don't pay myself weekly, i just pay expenses and a bit here and there as i also have a part time job.

I am now going into my final year in college come September and i wont really have time to do all college work, business work and part time work. My plan was to maybe wind up the business or maybe take a year of trading but with accountancy fees etc its not practical to do that.

I don't want to give too much away about the business but it is all through ebay. The product is very high quality and is sold for 70% less than in shops. On ebay .ie I am the only person selling this product in multiple styles. 80% of my sales are outside Ireland with the UK being my biggest customer base. I have a customer database with all previous customers email address'. The margin on the product is over 300% and I still have plenty of stock. It's not a unique product but is in demand. The company has a business bank account and will be doing second year end accounts next month so any check is welcome if there was a interested party in the business.

My supplier in china is very reliable and the quality is perfect.

I have googled ebay business for sale and they seem to sell them without their ebay account and limited stock. My question is this: Is a ebay business worth anything? other than the value of the stock. Can it be worth more with a contract to say that i wont compete or use supplier etc.

All opinions welcome.

Thanks

Peterdalkey · 10-07-2012 2:02pm

Well done on your business, part-time job and studies!!

It is unlikely that anyone would buy the company itself, as the potential for liabilities, cost of due dilligence etc in such a low turnover entity would not justify the professional/legal expenses.

A general rule of thumb is that a business is worth around 5 times after tax profits OR the value of the assets, possibly plus an extra percentage for goodwill, whichever is the higher. As you have not been taking a salary, any buyer would discount this back on the offer price calculated from after tax profits.
Most business sales come with a non compete clause as standard for at least two years. If you are just selling the stock, no non compete would apply. Your other assets are your trading name ( goodwill) and your customer list ( which is assuming the customers repeat buy from you.

Hope this helps, if you wish to ask any questions, please feel free to PM me.

Cheers

Peter