One of the early steps in the process is valuation. We need to come up with a number, and you do also. We use the discounted cash flow (DCF) valuation method. This is a calculation of future cash flow as a way to finance the acquisition.
How much will we pay you for your company? How much would you like to sell it for? In this way, it’s no different than buying or selling a car or a house. We make an appraisal of how much your company is worth.
This is not as fancy or as formal as it sounds. It can be done relatively quickly using financial data from the previous 12 months. If we’re talking with you in April, we would want your financial information from April of the prior year to March of this year, for example.
You can provide a Quickbooks file, an Excel spreadsheet, a Google Worksheet, or an exported .csv file from whatever accounting software you use. If your information is well organized, great. If not, don’t worry. We’re used to doing this and can usually decipher whatever information you provide.
Are you uncomfortable providing sensitive financial information to a relative stranger? We understand. Please read this section on security. It will ease your mind.
The “bottom line” on valuation is as the old saying goes: Something is worth what someone else is willing to pay for it. In most cases, this number is going to be a compromise on the part of both parties.
As far as payment goes, we can establish a plan that best suits your needs. Whether you’re looking to get compensation up front with a one-time payment, or looking for monthly revenue until the payment is complete, we’ve got you covered.