They participated in our transactions
How to price e-commerce or SaaS?
A common and challenging scenario is determining the individual value of a company, which depends on many factors. In such cases, valuation models can yield vastly different results. The seller’s perspective often differs from the buyer’s. In practice, a business is worth what the other party is willing to pay for it at a given moment.
First, an appropriate valuation model should be chosen based on the specific situation of the business. For subscription-based SaaS, a multiplier valuation based on MRR or ARR is often used, adjusted for dynamics, scale, growth prospects, diversification, market conditions, and other factors.
The matter becomes more complicated when dealing with e-commerce businesses that are not profitable or have an EBITDA that does not reflect the real value in a multiplier valuation.
Appropriate company valuation is crucial.
The valuation is relative and depends on several factors, including the operational and financial condition of the company, the available time, and the realistic business environment. It’s crucial to understand both perspectives.
Here are some key points:
- Profitable Business with Growth Potential:
- If the business is profitable with good growth dynamics, a favorable market environment, and reasonable scale, it can attract multiple entities to the final phase of the transaction.
- Conducting an offer competition in the form of NBO (Non-Binding Offer) allows the company to choose the best offer. The highest price isn’t always the deciding factor; other components also play a role.
- Business Facing Difficulties
- If the sale is driven by challenges such as owner fatigue, a weakening market position, poor growth dynamics, or a downward trend, it’s often advisable to calculate a specific amount and present it to the market.
- In such cases, the reconstruction method with elements of post-merger synergy or profitability reconstruction through a scale strategy (e.g., operational processes) often proves effective.
Understanding these nuances helps in selecting the appropriate valuation model and approach, ensuring a fair and realistic assessment for both parties involved.
Company valuation with Venturepackt
A professionally prepared and effectively presented valuation is more than just a number; it conveys certainty, trust, and significantly increases the chances of success in the sales process.
A reliably priced online store or SaaS provides a negotiating advantage and helps determine optimal transaction conditions. Conversely, a poorly prepared or presented valuation can evoke inappropriate emotions and eliminate the opportunity for a transaction.
How the full valuation process works
- We collect key financial information about the business and the market, including competition.
- We analyze historical trends and prospects.
- We define assets as components of the valuation and divide them into possibly small parts.
- The final valuation contains a dozen or several dozen components with a precisely defined value and an explained methodology.
- We use at least three different valuation methods, contrasting and justifying the differences.
- We often present the valuation on behalf of our client, taking over some of the risk and responsibility.
Completed transactions
The process was challenging due to the involvement of financial investors in 4Swiss, in addition to our team. The primary challenge was to align the interests of all three parties. We were aware that an earn-out would be necessary, and that we would need to remain involved in the project.
The discussions were difficult, and in hindsight, it was highly beneficial to have Venturepackt acting as an intermediary. They facilitated the communication of interests between both parties and managed the process and emotions, which were crucial for the established model.
Consequently, after the transaction, we merged into a single entity that will operate under a new model for the foreseeable future. All parties agree that the transaction was a success.
Eliza i Marcin Pawełczyk
The decision to sell our online store was challenging, but with the support of Venturepackt, the entire process proceeded exceptionally smoothly.
The team meticulously managed every detail, from valuation and investor search to the finalisation of the transaction. They ensured that the sale was conducted swiftly and efficiently.
We are highly impressed with their professionalism and wholeheartedly recommend Venturepackt’s services to anyone considering the sale of their e-business.
Check the valuation of your company!
You certainly have an idea of the value of your company. Verify what our models will show.
We have simplified the assumptions to quickly and approximately determine the order of magnitude for the value of your e-business.
