How can I work out how much my mobile app is worth from these earning figures?


1

A CEO of a bigger company has contact me today asking if I am interesting in selling my Android application. He is asking for the numbers straight away and how much I want to sell it for.

The app has been in the market for almost a year. These are the earnings from the app for the last three months

July: $2300

August: $2700

September: $3800

How can I workout how much it is worth?

Should I tell him the earnings, and number of users etc?

Saas Partnership Business Selling Mobile Apps

asked Oct 16 '13 at 01:06
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578841441
111 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll

1 Answer


4

DO NOT GIVE HIM NUMBERS!!!!
Until he signs an NDA, beyond that do not discuss any operations until a Letter of Intent is signed.

What usually is of interest in an M&A are full details. I.E. your financial statements, your accountant would need to work those out, but they are for later.

What he likely needs is earnings, i.e. revenue, and expenses. To basically see what is profitable.

They will also likely need a number of users, number of paid users, etc

As far as estimates go, it's difficult to figure out. Rule of thumb it's 3 years EBIDTA, but gets wayyy more complicated with intellectual property, branding, etc

answered Oct 16 '13 at 01:17
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User60812
820 points
  • So what do I tell him now and what can I give him for now? – 578841441 6 years ago
  • for now just ask him to sign an NDA. It's a standard business practice. When he does, give him users, revenues, and expenses totals. Then ask him, what further drill down he will need – User60812 6 years ago
  • FYI NDA is a Non Disclosure Agreement. Basically saying he wont take your numbers and disclose them to people not privy to current transaction – User60812 6 years ago
  • Pardon me for asking, but what why is a NDA important. what if he discloses this information with others. Why is it bad for me? – 578841441 6 years ago
  • If he reveals your earning and expenses, it may compel other companies to get into business. It would also increase a chance of you getting "shafted" in an acquisition. Basically if I know what your company is worth prior to negotiation, I have more time to lower the valuation with a variety of strategies – User60812 6 years ago
  • Even with an NDA, the other company could just be fishing to see if they should copy your app. If your numbers indicate it is profitable, they just go away and clone your app. The NDA needs to cover that situation as well. – Gary E 6 years ago
  • very true Gary, I missed that – User60812 6 years ago

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Saas Partnership Business Selling Mobile Apps