Originally Posted by devonblzx
First off, what do you mean by annual income? So many people on these forums refer to revenue as income.
If you mean net income, then I would say 1-2x that plus fair value of assets depending on the brand recognition and reputation.
If your brand is well known and you have a flawless reputation, you could do 2x without issue.
Finally, someone who doesn't read the WHMCS scripts
and uses the word Income as Revenue !
Originally Posted by winuser
I think net profit is much more important than turnover or sales. A company could be making 100 000 usd turnover and no profit or 50 000 profit
When i was reselling hosting my net profit was more than 50% of turnover
In general this maybe the case. However, think of it like this. What if someone didn't get discounted pricing on leasing servers, or had lousy colo pricing and had INEFFICIENT expenses. The moral of the story is, you need to read the whole story. Is the company growing, are they profitable, what are the retention rates, how long have they been in business, brand reputation and recognition, competitors, is there an opportunity for me to make this business more efficient, more effective, and more profitable. Does this company fit into my current business model, do I have room on my infrastructure/network to take on this additional capacity and reduce operational expenses.
These are some of the key items I discuss with my clients when going through mergers or looking to buyout a company.