How much do I sell for?

[FBoy]

I have a small but successful computer consulting business with a service industry client base (no residential clients). A large competitor wants to hire me (and of course bring my clients with me to the comapny). I am not selling my name, inventory, or anything else. These clients represent about $60,000/year in net revenue. If completed, this would help the buyer expand its cutomer base in a neighboring city they are trying to get established in. The buyer has all the necessary infrastructure and personnel in place to support these clients without a significant drain on its resources (remember, this is a much larger company).

I have done some cursory research, and spoken to a few people, and I have come up with anywhere from 1-3 times the annual income. Is there a formula to determine the value? Would a CPA or a financial advisor know? Or should contact an attorney to help in negotiation?

[K9Gourmet]

I have a small but successful computer consulting business with a service industry client base (no residential clients). A large competitor wants to hire me (and of course bring my clients with me to the comapny). I am not selling my name, inventory, or anything else. These clients represent about $60,000/year in net revenue. If completed, this would help the buyer expand its cutomer base in a neighboring city they are trying to get established in. The buyer has all the necessary infrastructure and personnel in place to support these clients without a significant drain on its resources (remember, this is a much larger company).

I have done some cursory research, and spoken to a few people, and I have come up with anywhere from 1-3 times the annual income. Is there a formula to determine the value? Would a CPA or a financial advisor know? Or should contact an attorney to help in negotiation?

When selling clients or in your case bringing them with you to another business that will absorb them the general formula is that you sell them for 10 times what you make on them in a month (gross). If the clients are not on a monthly contract then take what you make of the client in a year (gross) divide by 12 and multiply by 10 and there is your price for that client.

[fredkawig]

Depending on the net worth of your current business, you should compare the offer of your competitor if it is worth the sell of. A CPA may assess the value of your business and its net worth, you should definitely hire a Good and Honest CPA to assess the value of your business. You should also let your lawyer know whether or not the contract you have with the one who's trying to hire you, clean and without any kind of loopholes that will backfire on you.

[delusional]

Understand your position
There are generally two situations a start up will find itself in acquisition talks. Things are either going well for the company and their popularity, mixed with their product, is driving negotiations, or the company is dealing from a position of necessity through pressure from the board, or entrepreneurs looking to move on. Whatever the driving force, it’s important to understand your own company dynamics and how they are perceived by the acquiring company.

I agree with this. Also be aware that a large company can play it very rough and try to steal your clients if you don't work with them.
Are they only buying your clients? I'm asking this because if they buy your clients, you are left with your stock and no clients. So think about that.

[oregano]

I agree with this. Also be aware that a large company can play it very rough and try to steal your clients if you don't work with them.
Are they only buying your clients? I'm asking this because if they buy your clients, you are left with your stock and no clients. So think about that.

elidbugg's comment above is very pertinent to your bargaining position. Has your new employer actually agreed to pay you outright for your client list? I was once in a situation where I brought my existing clients to a competitor and negotiated a larger than typical percentage take on each job (I had a modest basic salary too), plus some equity in the other company - there was never any talk of selling my client list for cash. That was a different industry, though.

It does sound like you might be dealing from a position of necessity here (but I might be wrong!) as your revenue isn't that large and you appear to feel the need to go and work for someone else that maybe offers greater opportunity and stability.

[useruseruser]

As much as you can get. That's the simple answer. Make sure not to let them bully you , Let them know that your assets are valuable to their business. Just make sure not to get a bad deal. I wish you all the best if you go through with it.

[dancarthy]

Well I hope my comment didn't come too late, but you should read this guide before you do anything. It's a step-by-step guide and the first paragraph titled right away "How much is my business worth?" http://firmgains.com/prepare/how-to-...business-sale/

I hope it will help.

[MahaKarthi]

The selling methodology depends on the nature of the business and the bidding rates. At times it may be high or comparatively low because of the demand of any product or service.

[DouglasSSaucier]

The selling methodology depends on the nature of the business and the bidding rates.

[Malik Suleman]

I have a small but successful computer consulting business with a service industry client base (no residential clients). A large competitor wants to hire me (and of course bring my clients with me to the comapny). I am not selling my name, inventory, or anything else. These clients represent about $60,000/year in net revenue. If completed, this would help the buyer expand its cutomer base in a neighboring city they are trying to get established in. The buyer has all the necessary infrastructure and personnel in place to support these clients without a significant drain on its resources (remember, this is a much larger company).

I have done some cursory research, and spoken to a few people, and I have come up with anywhere from 1-3 times the annual income. Is there a formula to determine the value? Would a CPA or a financial advisor know? Or should contact an attorney to help in negotiation?

you should contact an attorney.