Investors want buy my company

[geraldinnechan5117]

@drdax Handling a lot of money compared to returns. Cash out and they could still hire you to consult plus give you time to run your other business.

 

[drdax]

@geraldinnechan5117 What would be a reasonable offer for my consultancy? It should be valued per hr or for example 40 hours per month?

 

[geraldinnechan5117]

@drdax The structure and payment will really be up to you and them. I would chose something that fits your lifestyle and that you are comfortable with. As far as what to charge I would look at what consultants in that industry are getting or double or triple your hourly pay now. At the end of the day its your company your call. Give them your wish list and negotiate from there.

 

[melodyjane]

@drdax Hey, i have been valuing companies in latam for 8 years so i know a lot of how institutional investors think. What i learn from investors is that they could be very bullish about your business so it should be a nice exiting point (cash out). and if they pay you this 6x ebitda they think they will earn more. However do you think that your business could increase revenue o widen margins? If you feel investors are more bullish than you, ask them more money, they will increase the offer and you leave.

If you think that your business is still small, you can keep it growing and decline the offer, investors will try to pay even more, but you still dont have a "price".

Finally, i think that the most important thing is emotionally, do you want to leave working in that space? what would you do with such amount of money? what makes you feel better your own company (growing) or a nice bank account?

Hope you the best for you!

 

[jackaharts]

@drdax Don’t sell at 1.1, keep churning another couple of years and grow it further then you can get 8-10

 

[nathantgibson]

@drdax Margins are low but that may be norm for this industry. 7 times multiple usually only applies to a business with good revenue but also substantial margins.

 

[hibble]

@drdax Absolutely not. If your making 7.5m a year already you shouldn't be looking at offers lower than 15+ not to forget paying tax on amount you sold for.

 

[drdax]

@hibble Did you check ebdita?

 

[khazarian1]

@drdax Why is it low?

 

[weesa]

@khazarian1 Paying the wages of the recruiters. I think 6 times free cash flow is pretty reasonable for a business like this.

 

[613jono]

@weesa Don't get EBITDA and FCF mixed up G

 

[613jono]

@khazarian1 this is a low margin businesses man....it can only be increased through volume. all you're doing is connecting employees to employers and charging a small commission, it's not reasonable to charge a fat fee.

 

[drdax]

@khazarian1 Leasing of the workers (revenue is the income before paying salaries to those ~400 people)

 

[khazarian1]

@drdax You have 400 people and only earn 180k. Man I would totally sell it.

 

[mrdp]

@hibble Profits are much much more heavily factored than revenues. It's referred to as "owner benefit". The current and potential owner only benefit from profits.

 

[boots3407]

@drdax I beleive its a good deal based on the edita and the offer. So SELL it.

 

[joyanu]

@drdax By simple math that 6x your 2023 profits.

People get greedy and want 10-15x or more.

I think you negotiate up to 8x and sell.

Thats a niche volume business thats difficult to scale and doesn't yet have (good) automation capabilities.

Once someone figures out a way to automate, unless you can adapt quickly, your business will fail.

I'd personally negotiate and sell somewhere between 6x - 10x your 2023 ebdita earnings.

 

[613jono]

@drdax Thats a very good multiple on your ebitda.

Your ebitda relative to topline is pretty bad tho, is there a way to increase that?