Exiting

How I built and sold my business in 18 months

Selling a company for big money is an alluring end for many entrepreneurs. Michael Thomas realized that exiting a company is as much about how you built it as it is finding the right buyer
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So that M in the value equation above can be broken down further:

M = growth rate + % of revenue that is recurring + factor 3, factor 4, etc.

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Business growth
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Of course, each factor has a different weight associated with it. How much weight, or if a factor is even considered depends on the investor. As my Dad likes to say, at the end of the day the price of anything is based on what someone is willing to pay for it. This equation simply helps you figure out what the average investor—call it “the market”—is willing to pay for an asset.

Every asset and industry has a different formula. But for technology companies here are some factors investors consider:

Revenue growth rate

Gross margin growth rate

Lifetime value of a customer (LTV)

Customer acquisition cost (CAC)

LTV to CAC ratio

% of revenue that is recurring

% of cash collected upfront

Website traffic and growth rate

Email subscribers and engagement rate

Website conversion rate

Social followings by channel

Brand (difficult to measure)

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