What is the general rule of thumb for selling a product line? I'm thinking of selling off one of my product lines since it's too much effort for too little money. I have heard the general rule is five times the annual revenue (gross). Does anyone know?
Question On Selling A Product Line
How much $$$ do you make per year (IE. Few hundred a month? or six figures+/yr)? Different industries have different multipliers also.
If it's big enough an investment bank may sell it for you. Otherwise there are plenty of smaller places that will let you sell it.
If it's big enough an investment bank may sell it for you. Otherwise there are plenty of smaller places that will let you sell it.
At the end of the day it's worth what someone will pay for it. The whole 5x-8x is more for a long running established business ideally something that comes with stuff be it real estate, equipment, etc. In the online/digital realm in my experience you'll never come anywhere close to that.
No idea what your product is, if it's something digital your going to have a hard time selling it. If its a tangible item that you hold a patent on or something like that will be much easier to sell and may get a 2-3x multiple.
If the product hinge on your or your likeness in any way it has 0 resale value.
If your open to sharing what the product is or at least give us a bit of a better idea we can probably give you a better idea of value.
No idea what your product is, if it's something digital your going to have a hard time selling it. If its a tangible item that you hold a patent on or something like that will be much easier to sell and may get a 2-3x multiple.
If the product hinge on your or your likeness in any way it has 0 resale value.
If your open to sharing what the product is or at least give us a bit of a better idea we can probably give you a better idea of value.
It's a product used in the arts and crafts industry. It does 30K a year in business. As you can see, not much. But it is a physical product with its own logo, etc. The product line would come with the artwork and packaging machine we built just for the product.
Quote: (10-13-2015 09:18 PM)ColSpanker Wrote:
It's a product used in the arts and crafts industry. It does 30K a year in business. As you can see, not much. But it is a physical product with its own logo, etc. The product line would come with the artwork and packaging machine we built just for the product.
Is it pretty much turnkey in that you can hand over suppliers who already have your artwork on file and the new owner can pick up right where you left off basically?
Is the product sold on Amazon and if so does it have reviews? Crafts isn't really my niche but I just got my Amazon account unsuspended and my previous category is no longer allowed so may be looking into more products for the future. Can you give an idea of what kind of margins it has?
Jamaica: yes and yes. Reviews are good, although I have had to go on-line and complain to Amazon about A-holes who use rival products and post malicious reviews about mine. The packaging machine is custom-built and weighs several hundred pounds so you would need a pick-up truck to move it.
Margins are phenomenal,BTW. But you can get those if you don't sell much.
Giving this a bump since it's one way out of my current predicament. I've sent an email to one of my major customers about them buying the line from me, but no response as of yet. Are there reputable websites where you can go to sell a product line?
Quote: (08-11-2017 09:15 AM)ColSpanker Wrote:
Giving this a bump since it's one way out of my current predicament. I've sent an email to one of my major customers about them buying the line from me, but no response as of yet. Are there reputable websites where you can go to sell a product line?
is the product line sold online, via website?
If it's an online business, you can try your luck here:
https://empireflippers.com/
I haven't used these guys but I've read the reviews and they are usually positive.
One other place I've heard is http://feinternational.com/ I think the owner of Drip sold it via them.
Both of these guys are brokers, so they'll take 10-15% of your profit after the sale.
I'm doing this currently, through force of circumstance.
What's the growth potential if a larger company takes it on?
What's their additional spend on tooling etc to make a go of it?
Are you dead set on money up front, or would you take a percentage of sales to get it off your hands?
Who'd buy it to have you out of the market place?
Do you have an advantage over other competitors that someone will pay for?
What's the growth potential if a larger company takes it on?
What's their additional spend on tooling etc to make a go of it?
Are you dead set on money up front, or would you take a percentage of sales to get it off your hands?
Who'd buy it to have you out of the market place?
Do you have an advantage over other competitors that someone will pay for?
It's 2.8-3.5x EBITDA.
As you are experiencing it is very hard to sell a business, or in this case a product line. The sales price might be the worth or not, depending on the circumstance; as other poster mentioned, the sales price will be where the amount you are willing to let it go for meets the amount a buyer is willing to pay.
The obvious interested parties are your competition. If you haven't done so yet, pick up the phone and call them; offer them the line. Also, you mention you have packaging machine, that has to be worth something. The actual value will be the value of the assets + a year or two of profits.
At 30K/year gross, I don't think any broker will move a finger for it. Maybe you are better off just selling the packaging machine by itself to a competitor.
Another option is to create a company that will do business with this product only. Then contact some immigration lawyers that specialize in investors visas and go from there. These lawyers should always be looking for US companies for their "investors" clients so they can process visas.
The obvious interested parties are your competition. If you haven't done so yet, pick up the phone and call them; offer them the line. Also, you mention you have packaging machine, that has to be worth something. The actual value will be the value of the assets + a year or two of profits.
At 30K/year gross, I don't think any broker will move a finger for it. Maybe you are better off just selling the packaging machine by itself to a competitor.
Another option is to create a company that will do business with this product only. Then contact some immigration lawyers that specialize in investors visas and go from there. These lawyers should always be looking for US companies for their "investors" clients so they can process visas.
"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."
— Robert Heinlein
Could you hire an assistant to take care of the day to day operations whilst still making a profit and hopefully growing it?
Also is the brand trademarked? If you don't own the trademark it's worth exactly ZERO dollars.
« Next Oldest | Next Newest »
Users browsing this thread: 1 Guest(s)