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Everybody has these giant fantasies their company will be bought for giant amounts, but it's mostly just 3x, 4x or 5x your annual revenue for bootstrapped companies (generally)
An easy way to see if it makes sense to sell your business:
Annual revenue * 4x * 10%
Is what you can get long term if you invest the money of selling your company for 4x in diversified ETFs over 20 years (10% avg / year, not every year)
Annual revenue * 4x * 10%
Is what you can get long term if you invest the money of selling your company for 4x in diversified ETFs over 20 years (10% avg / year, not every year)
So if you have a business that does $100,000/y, let's say you sell for 4x, that's $400,000. Now you can get $40,000/y or $3,333/mo in ETF investment returns (on average, long term).
That's less than the $8,333/mo you make from the business ($100k/12mo)
That's less than the $8,333/mo you make from the business ($100k/12mo)
So by selling you generally actually lose more than half your incoming revenue if you invest the cash from the sale properly @ 10% ETFs.
So selling makes sense if you
- don't wanna work on it anymore (peace of mind)
- de-risk (a biz is risky, can end any day)
So selling makes sense if you
- don't wanna work on it anymore (peace of mind)
- de-risk (a biz is risky, can end any day)
A lot of sales esp in VC funded world are not so much about the ROI for founders, often it's stock in the acquirer company that's not sellable.
But they get the badge of having sold a startup = good for networking/career
But they get the badge of having sold a startup = good for networking/career
