How to Sell Your Tiny Empire
The Tiny Acquisition Framework
Most people find the idea of selling their business to be quite daunting, but it doesn't have to be.
Having sold multiple projects myself, ranging from a few thousand dollars to multiples of six figures, I've found the basic process is really no different from selling anything else:
Agree on a price
Create a contract
Sign and transfer funds
Transfer the assets
Not only is this a good way to make money, in some cases it can also be a very tax efficient way to extract money from your business. Let's dive into the details.
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Valuing Your Business
In my experience, most online businesses sell for 4-4.5x annual revenue.
So if your annual revenue is $50k, you could potentially sell for $200-225k. However, the exact multiple will vary based on several factors:
Business type (SaaS, ecommerce, content site, etc)
Stage (early revenue vs mature and profitable)
Growth rate and trajectory
Unique assets like large, engaged email lists or social followings
Strength and defensibility of revenue streams
For example, a high-growth SaaS business with sticky subscription revenue may command a 5-6x multiple. An early-stage ecommerce brand doing $500k in revenue with a strong email list might get 3-4x. A mature content business with flat growth may only sell for 2-3x. Research comparable acquisitions in your space to benchmark valuation ranges.
Finding Buyers
The most common ways I've sold businesses are:
Being contacted directly by potential acquirers
Reaching out to potential buyers, usually via email
Listing on acquisition marketplaces like MicroAcquire
The beauty of building a niche business is that bigger players in your market will often be interested in acquiring you to quickly expand into your niche. Some effective ways to surface potential acquirers:
Check domain names of companies/people on your email list for relevant partners
Ask for introductions from advisors, investors, or others in your network
Research companies who have acquired similar businesses
Cold email decision makers at logical acquirers with a compelling pitch
When reaching out, personalize each email and lead with why it would be strategic for them to acquire you. Leverage any existing connections for warm introductions. Prepare an anonymous teaser deck or memo to share with serious buyers under NDA.
Asset Sale vs Share Sale
There are two main ways to structure an acquisition:
Asset Sale - You sell only the key assets (domain, code, IP, contracts, etc). The acquisition price counts as revenue to your company.
Share Sale - You sell your actual shares in the company. The price goes directly to you without hitting company revenue.
The key differences:
In an asset sale, the acquisition price is taxed as company revenue, then taxed again when you distribute it as salary or dividend. You keep the company shell.
In a share sale, proceeds are taxed as capital gains (usually lower than income taxes) and paid directly to you. The buyer gets the company and all assets/liabilities.
Share sales are typically better for sellers from a tax perspective. However, they are harder to execute as the buyer usually needs to be in the same country and take on the whole company structure. Asset sales are more common, especially for smaller deals and international acquisitions. The specific tax treatment varies by country, so always consult local professionals.
Tax Efficiency Hacks
Through proactive planning, you can greatly minimize taxes on an eventual sale.
Here's an example:
Start a side project while working full-time (keeps living expenses covered)
Reinvest 100% of profits into growth - ads, content, links, tools, etc.
Don't pay any dividends or salary, so no tax owed (business makes no profit)
Grow to $200k annual revenue after 2 years
Sell business for $800-900k (4-4.5x annual revenue)
Structure as share sale, pay capital gains tax in most countries
Net $720-810k cash proceeds from 2 years of "sweat equity"
The keys are operating in a lean fashion, aggressively reinvesting for growth, and structuring the deal to minimize taxes. A good accountant and lawyer are a must for advanced planning.
Legal Process Overview
For smaller acquisitions under $20k or so, you may be able to DIY contracts from templates or using AI tools (though still advisable to have a lawyer review). When deals get into the mid five-figures and up, retain experienced legal counsel to guide you through the process:
Non-Disclosure Agreement (NDA) - signed before sharing sensitive info
Letter of Intent (LOI) - non-binding terms sheet to confirm key deal points
Due Diligence - buyer's chance to verify information and assess risk
Definitive Agreement - final binding contract outlining all terms
Closing - signing, funds transfer, asset transfer, handover
Negotiate key points like total price, deal structure, payment terms, non-competes, and reps & warranties. It's a back-and-forth, so anticipate multiple rounds of redlines. Deals can take anywhere from a few weeks to several months depending on complexity.
Post-Acquisition Considerations
Signing the deal is not the end of the acquisition journey. Key things to navigate post-close:
Handover and training the new team on your business
Serving out any negotiated transition period (typically 3-12 months)
Handling earnout targets and payments if applicable
Communicating change to clients, partners, and other stakeholders
Dealing with legal or operational post-closing matters that arise
Staying motivated and focused if you have to continue running the business for a period
Some acquisitions include an “earnout” period where a portion of the deal consideration is tied to revenue targets. This often keeps you involved in the business doing to ensure a smooth transition. Earnouts are tricky because you lose some control but your payout depends on performance. Think carefully about post-exit involvement and try to minimize earnouts if possible.
Negotiation Mindset
An acquisition is a negotiation like any other business deal. The buyer's incentive is to pay as little as possible while the seller wants to maximize price. Key negotiation tactics I've used:
Anchor high and justify your target valuation with supporting data
Create competitive tension and FOMO by nurturing multiple buyer conversations
Sell the strategic value of your business vs pure financial return
Negotiate key terms simultaneously, not separately, as parts of a package
Be willing to walk away if a buyer won't meet your baseline acceptable terms
Leverage time pressure and deadlines to drive buyer urgency and action
Keep a collaborative spirit focused on getting a fair deal done
At the end of the day, the best leverage is having a great business that buyers really want. Focus on building an asset that's valuable, defendable, and synergistic for the right buyer. That more than any negotiation tactic will lead to a good outcome.
Key Takeaways
Selling your business can be a highly profitable and tax-efficient exit if planned properly. To maximize your outcome:
Build a business that's valuable to the right strategic buyer
Estimate your valuation based on industry comps and business specifics
Proactively identify and contact potential acquirers
Aggressively reinvest for growth and minimize taxes pre-sale
Hire experienced legal and financial advisors for complex deals
Mentally prepare for the emotional challenges of the exit process
Structure the deal to minimize taxes, especially pursuing share sales
Stay engaged post-acquisition to ensure a smooth transition
View your exit as a strategic negotiation and adapt your approach
With the proper knowledge, planning, and execution, you can navigate the acquisition process and achieve an incredible outcome. Don't let fear or impostor syndrome hold you back from pursuing this path. Selling your business may be the best decision you ever make.
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