i have been contacted by a reseller to buy out his clients. he is not with our company however he is using our cpanel software.
how does one place a fair value on this client list?
how does one confirm or even attempt to verify income?


whats it worth- forumlas or theory appreciated....

as always,

thankyou,

miami_g

Usually you would pay a year of profit to him from his clients.

First you need to look at his plans. Does he have 30 customers at $3 monthly or 9 customers at $10 monthly. Need to consider if the customers have paid for the year (in which they are worthless to buy because he gets the money and you have to support them) and does his plans match yours? Also, if you are moving the customers from his server to yours and other things like that need to be taken in consideration.
I'd take his monthly income and multiply it by 3 months and then see if they are worth it then.

Originally posted by Palm
Usually you would pay a year of profit to him from his clients. A year of profit? What if he's losing money, does he pay you? If he fired all his support staff two months ago, his profit has increased... so are his now-angry clients now worth more to you?

No way is there any approach to this or standard formula that be identified by saying "usually" and that can be stated in one sentence. As ibiz points out, there are a lot of things to be considered in determining the value of a given set of clients, and their value specifically to you.

That "year of profit" approach is probably a good deal from the sellers' point of view, but as a buyer you're not concerned with what the other company's profits were; you're concerned with what yours will be. That should be your approach to negotiating a price.