Skip to main content

Expert Tips for Successful Micro-Startup Transactions

Selling Your Micro-Startup: Maximize Value with Data​

When preparing to sell your micro-startup, optimizing your listing with key metrics is crucial for attracting potential buyers. Follow these steps to create a compelling listing:

1. Provide Essential Information:​

Ensure your listing includes vital details such as:

  • MRR (Monthly Recurring Revenue)
  • TTM Revenue (Total Revenue from the last 12 months or since inception)
  • Total number of users (free + paid)
  • Number of paid users

2. Highlight Churn Rate:​

Calculate and showcase your monthly churn rate to provide insights into customer retention:

  • Churn Rate = (Customers lost in a month / Customers at the beginning of the month) * 100

3. Showcase Profitability:​

Demonstrate the efficiency of your business by presenting the net profit margin:

  • Net Profit Margin = (Net Income / Total Revenue) * 100

4. Determine an Optimal Listing Price:​

Utilize a proven formula to evaluate your micro-startup:

  • Listing Price = MRR * 12 * Multiple (Varies by industry)

Consider common multiples used on platforms:

  • a. SaaS: 2x-3x on TTM Revenue or 5x on TTM Profit
  • b. Ecommerce: 1x-2x on TTM Revenue or 3x on TTM Profit
  • c. Marketplace: 1x-3x on TTM Revenue
  • d. Agency: 1x on TTM Revenue or 1x-3x on TTM Profit

Add value to your business by providing detailed information, and offer 1 to 3 months of post-sale support.

5. Leverage a Proven Platform:​

List your micro-startup on a trusted platform to maximize exposure and attract potential buyers. We recommend BuyMicroStartups, a marketplace for buying and selling micro-startups.

7. Disclose private information safely:​

Protect your business by sharing sensitive information only after the buyer signs a Non-Disclosure Agreement (NDA). You can find a free template on your listing page.

8. Secure Transactions with Escrow.com:​

You should sign a Letter of Intent (LOI) with the buyer. LOI is a non-binding document that outlines the terms of the transaction. Yu can find a free template on your listing page.

We recommend using Escrow.com to ensure a secure transaction. Escrow.com is a licensed and regulated escrow service that protects buyers and sellers by holding funds in a secure trust account until the transaction is complete.

We recommend the following process:

  1. Agree to Terms: Define terms with the buyer.
  2. Use Escrow.com: Add transaction details to ensure a secure process.
  3. Buyer Pays Escrow.com: Secure payment via wire transfer, credit card, PayPal, check, or money order.
  4. Verification and Shipping: Escrow.com verifies payment, and the seller ships the merchandise.
  5. Buyer Accepts Merchandise: Upon satisfaction, the buyer accepts the product.
  6. Payment to Seller: Escrow.com pays the seller.
  7. Funds Release: Escrow.com releases funds to the seller.

Buying A Micro-Startup: Navigate the Acquisition Process​

If you're considering a micro-acquisition, these tips will guide you through a successful transaction:

1. Verify Before Payment:​

Prioritize verification by:

  • Setting up video calls to confirm data with the seller.
  • Ensuring all backend data matches the listing.

2. Conduct Comprehensive Market Research:​

Invest time in understanding the market sector, principal suppliers, and customers, and evaluate market performance and the target company's position.

3. Focus on Key Metrics:​

Pay close attention to essential metrics, including MRR, Revenue, Profit, Multiple, and the Tech stack.

4. Make a Strategic Offer:​

If the listing price doesn't align with your expectations, engage in negotiations and be prepared to make a counteroffer.

5. Be Ready to Reject:​

Don't hesitate to say no if the offer conditions do not meet your expectations.

6. Thorough Homework Pays Off:​

Prepare a set of detailed questions related to the business for a comprehensive evaluation.

Following these expert tips will significantly enhance your chances of a successful micro-startup sale or acquisition.