Kaching!: Monthly Recurring Revenues
What business doesn’t love predictable, reliable monthly recurring revenues (MRR)? But if you’re considering selling a company that enjoys recurring monthly revenues, what factors should you consider before selling? How do you know if you’re making the right decision?
The Pros of Selling A Business With MRR:
- High Valuation: Companies with MRR often command higher valuations due to predictable income streams, making it an attractive option for potential buyers.
- Market Conditions: If favorable, selling could yield a substantial return.
- Capital Access: Selling can provide immediate capital, which might be needed for other investments or personal financial goals.
- Risk Mitigation: Exiting at a peak valuation can protect against future market volatility or operational challenges.
The Cons of Selling A Business With Monthly Recurring Revenues:
- Future Growth: You might miss out on potential growth and increased valuations as the company scales.
- Steady Income: MRR provides a stable and predictable income, which can be a significant advantage over a lump-sum payout.
- Control and Vision: Selling means relinquishing control, potentially altering the company’s direction and culture.
- Tax Implications: Selling might result in substantial tax liabilities, reducing the net benefit.
Next Steps When Considering Selling Your Business:
- Business Performance: Evaluate the current and projected financial health and growth potential.
- Personal Goals: Consider your financial goals, risk tolerance, and readiness for a change.
- Buyer Market: Assess the interest and offers from potential buyers to gauge the market value.
- Industry Trends: Analyze industry trends and market conditions to determine the optimal timing for selling.
- Legal and Financial Advice: Consult with financial advisors and legal professionals to understand the implications and structure the best deal
In conclusion, selling a company with MRR can be highly advantageous but requires careful consideration of market conditions, personal goals, and potential future growth. Balancing these factors will help make an informed decision. I have helped numerous businesses with monthly recurring revenues evaluate their options, including selling a business with MRR and finding the perfect motivated, qualified buyer.
Eric Wayne, an experienced, trusted, and top-five percent ranked Florida-based business broker, knows all the angles, pitfalls, and secrets of successfully valuing, evaluating, listing, marketing, and selling your business to a motivated, qualified buyer. Call Eric today and get started. Don’t go at it alone.
