Selling a small ISV company (lock stock and barrel)

Question

I own a small ISV company that consist of 2 people. We sell a single product built using Microsoft web technologies (ASP/VB6, some .NET). In business for a a few years now, and with relatively stable gross revenues in the low 6 figures.

I'm considering selling the company and moving on to something else, but I'm a unclear on the best approach to to take. I'm not expecting a huge price, and I'm thinking of a gross revenue multiplier of 2 (which seems low to me... but what do I know)... so call it mid 6 figures.

Any suggestions on how best to proceed?

note: Though not directly programming related the question may be of interest to developers. I wrote the application, every single line of code (so it's not like a phb is asking). Perhaps the moderators could give the question a bit of time to see if community takes an interest.

Answer 1

When you say you are not clear about the best approach to take, do you mean you don't have any buyer yet ?

If that's what you are looking for, I would go first to your company's network: Who is the other person in the company, does (s)he wants to buy your share ? Do you have external investors who could be interested by buying the whole company out ? Do you have customers who could be interested (they are losing a provider after all) ? Do you have providers who could be interested (they are losing a customer) ?

If none of that works for you, I would look for the "extended" network of your company: Partner in business, if you have any (like a hardware manufacturer if you do embedded software). Look at what other software your customers are buying. If it's a very niche market and as you are sharing a customer, their other providers may be interested in buying you out for having another source of revenue with an already established commercial relationship.

Lastly, what about your competitors in this market ? If they buy you, they will mainly buy your customers' portfolio. But maybe they are willing to expand at low cost via a "merge" with your company.

It seems really like when you are looking for a new job to me: It's about using all your network first before looking somewhere else, as it is where you generally get the best results.

Best of luck.

Answer 2

Consider one of the "Business for sale" web sites like www.bizbuysell.com. They also have a "Find a broker" feature.

Short of that I'd talk to the professionals you use (accountant, lawyer, etc). They may know of someone who is looking for a business to buy.

One think to keep in mind is that some buyers (like me) might be interested in buying the assets of the business (the code, the client list, the good will), but not the company it self. The distinction is a fine, but important one.