mobile-apps, software, exitI have a mobile application with a unique technology on image processing peoples faces. It has proven itself to be profitable and attracted investor attention. Though our marketing wasn’t a huge success it is easy to execute after this since I got the data about what not to do.
However I want to move on to another project cause I want to work on my best idea.
I have code base for Android and iOS, financial projections, investor slide decks, design files, market research documents, competitor analysis, unit models, business canvas, domain, social media accounts and a lot more that I wish to sell to another company or entrepreneur so they could continue the project.
So anyone buying this would be set to start raising millions in a week.
Where and how should I approach this matter?
It really depends on the stage your company is at, and on the state it’s in.
If the company is at a stage where it’s still a mostly vague idea, with some execution but you still running the show, then your only potential buyer isn’t really a buyer: it’s another entrepreneur with some cash to spare and no better idea, who would feel comfortable fitting in your own shoes.
Such entrepreneurs exist, but they’re about as common as unicorns so don’t hold your breath. In the unlikely event you find one, prepare yourself for another cold shower: roughly speaking, you’ll get what it would cost to reverse-engineer what you did and set up a me-too competitor from scratch. The price will be soul-shatteringly lower than anything you’ll have prepared yourself for.
If the company is at a stage where it’s running itself – as in you’ve enough staff and colleagues that you could take months of vacation while sales continue to grow, the product continues to improve, and things basically take care of themselves without you – then you have a much more sensible case.
Multiple scenarios here, which break down to how sizable your moat is (i.e. how hard is it to wave a me-too competitor into existence). At one extreme, you’re still very early stage, and a me-too business could rapidly step in. At the other extreme, you’re well into your growth curve and a me-too competitor would have serious difficulties catching up.
It’s important to insist here that potential buyers are actually sitting nearby at work: a management buyout (MBO) or a buy-in management buyout (BIMBO, where a new CEO steps in) should be an option if your colleagues want to take the business further, or if you’re so early in the growth curve that a me-too competitor could be waved into existence (see prior remarks on pricing if that is the case.)
When available funds don’t align with the company’s price, MBOs very rarely use VC funding in my experience – the deal flow is large enough that LBO funds can afford to be extremely picky. The alternatives are a good old bank loan, and/or financing provided by yourself. Meaning, in the latter case, that you get a nominal price upon closing the sale, and the balance spread over a few years out of the company’s profits – provided, of course, that there are any.
In the case of a BIMBO, another consideration is locating a new director that fits in well enough that your former management colleagues won’t run for cover the moment you disappear. In essence, though, you can think of it as selling a house, just harder and lengthier, complete with classifieds (there are specialized sites) and so forth.
The last option, of course, is to locate a company willing to purchase you. Typical marketing and sales considerations apply: work out what a potential buyer looks like, the upside your company would bring to the table were it acquired in lieu of merely striking a deal with it, and pick up your phone. You can get a steeper price, but it’s not necessarily a panacea if you’re bored with your business: this buyer will expect you to continue to lead the team for a short while.
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