You can sell your video conferencing business in six easy steps with the assistance of a business broker, although the precise sales journey depends on your specific situation and company details. This review discusses how to determine your value and sell a video conferencing company.
About The Video Conferencing Industry
The video conferencing industry is a fascinating industry that many expect to grow significantly over the next five to ten years (and beyond). Primarily, video conferencing companies provide computing infrastructure that is essential for high-quality video conferences and calls. Although computing infrastructure is the primary service and provided technology, the industry also includes data processing services, web hosting services, and streaming support services (source: Business Reference Guide).
How Do I Determine My Video Conferencing Company’s Value?
You can determine the value of your video conferencing company by multiplying your seller’s discretionary earnings, earnings before interest, taxes, depreciation, and amortization (EBITDA, and net sales by the following rule of thumb data (acquisition multiples:
- Video conferencing companies sold between 3.57 and 3.83 times the Seller’s Discretionary Earnings (SDE)
- Video conferencing companies sold between 1.05 and 3.76 times the annual net sales
- Video conferencing companies sold between 6.66 and 8.57 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
It is worth noting that larger companies, meaning video conferencing companies that have more than $5 million in annual net sales, have significantly higher acquisition multiples than the above ranges. In fact, video conferencing companies with more than $5 million in net sales sometimes sold for as much as 22.89 times their EBITDA and 8.27 times their SDE.
Of course, the factors that influence and determine your fair market value go beyond your financial information and rule of thumb data. Other factors may include your reason for selling, unique industry advantage, the quality of your computing infrastructure and workforce, and more.
You should also check: How to Sell an Animal Food Production Company
How Can I Sell My Video Conference Company?
We encourage you to work with a business broker who understands your industry because the sale of a video conferencing company is challenging due to a lack of recent sales data and the need for advanced valuations. However, the general process for selling a video conference company include these stages:
- Determine your asking price
- Create a sales strategy
- Bring your business to the market
- Review offers and negotiate
- Allow the buyer to complete due diligence
- Close the sale and transfer the business
Below is a more detailed look into each stage of the sale process. Of course, your process may look different depending on the specifics of your company and your goals. A business broker can provide a more personalized plan for you during a consultation call.
Stage 1: Determine Your Asking Price Via a Professional Valuation
A lot of work and thought should go into how much you ask for your video conferencing company. This should be a strategic decision that is based on recent sales data within your industry. Of course, as the seller, your goal is to maximize the purchase amount while minimizing the amount of time it takes to sell. The best way to determine the most appropriate asking price is wit a business valuation from a business broker.
Stage 2: Create a Sales Strategy With Your Business Broker
Your business valuation should come first as it plays a major role in developing your sales strategy. If your valuation is below what you desire, it may be best to wait and go to market when there is more demand and you have raised your video conferencing company’s value. If you achieve the valuation you wanted, your broker may recommend going to the market right away. During this stage, you will also determine other goals you may have (financial and non-financial). This second stage also includes preparation, such as preparing your financial information (tax returns, P&L statements, etc.).
Stage 3: Bring Your Business to The Market and Find a Buyer
Now for the exciting part — finding a qualified buyer. This process is far different than other types of sales. Unlike with real estate, cars, etc., you are not selling your business in a public manner. Rather than paid advertisements and other public marketing methods, you are selling your business in a confidential and private manner. This is why working with a business broker is essential. They maintain the confidentiality of the sale throughout the process by leveraging their private connections and networks.
Stage 4: Review Offers and Negotiate a Purchase Deal With The Right Buyer
Although your broker’s role is to find you qualified buyers, they should communicate with you and keep you informed every step of the way. In other words, you should have the opportunity to be hands-on throughout the process if you desire. After all, this is your video conferencing company, and you should ensure you agree with who purchases it. Your broker will review and screen all offers as they arrive and keep you informed. They can also assist with negotiations and contingencies and help you choose which buyer allows you to reach your goals the best.
Stage 5: Provide The Buyer With The Opportunity to Complete Due Diligence
Due diligence is a time for the buyer to verify information about the business, ask questions for clarification, conduct a walk-through of your normal business operations, and conduct any additional measures they feel is necessary before signing the purchase agreement. While this is a time when the seller should remain transparent, they should also have parameters in place to ensure the due diligence process does not drag on for months at a time. Your business broker should help ensure a swift and stress-free due diligence process.
Step 6: Close The Sale and Transfer Ownership to The Buyer
Lastly, you will close the sale. This involves reviewing the purchase agreement for a final time, attaining final signatures, and transferring ownership of your video conferencing company to the buyer. During closing, you will also receive the payment for the business and confirm that it has been sent to you. After the business is fully transferred and your employees, clients, etc. are notified, you are able to finish up your exit strategy, move forward, and start and enjoy the next stage of your professional and personal life.
Contact The Business Brokerage Team at Sigma Mergers and Acquisitions
Sigma mergers and Acquisitions helps business owners such as yourself sell for fair market value (or above). This is our passion, and we are proud to say that we have helped hundreds of business owners already plan and complete their exit strategy with success. We encourage you to contact us today to learn more and get started with selling your video conferencing company.
Scot Cockroft is the Owner & President of the #1 ranked Business Brokerage, Business sales and M&A firm in Texas. Scot has been named Named Deal Maker of the Year by Dallas Business Journal.
He is committed to a “different” type of business brokerage firm, one that is NOT about a sales pitch but, rather, results! In short, a business brokerage firm that is committed to performance-based compensation. Scot believes in these principles as well as a candid honesty with clients. His candid style often takes buyers and sellers by surprise, but is often what assures successful connections between the two.
Feel free to reach out!