A Glimpse at the Sector
The mobile app industry in Canada amounted to $8.2 billion in revenue in 2017, and while this statistic is from five years ago, the information age has significantly accelerated since then. In 2020, Canada was a leader in smartphone apps and game spending per capita, illustrating that this market is not only lucrative, but consistently active.
This is good news for those looking to sell their mobile app, and this article will uncover ways you can do so successfully.
Why Would you Want to Sell?
There are various reasons why people decide to sell their app:
- To lower financial stress.
- To take time off work.
- To move on to other business opportunities.
- For tax benefits.
However, before you go ahead with it, you need to know how to begin the process. Start off by:
- Getting your financial statements audited to boost buyer confidence.
- Collect customer feedback and find ways to increase a seamless user experience.
- List your mobile app online so potential buyers can find you and start enquiring.
How to Understand Your App’s Value
Before you can sell anything, you need to know what it is worth. It would be best to get an accurate valuation of your app before putting it up for sale.
To ensure you value your app as accurately as possible, consider the following variables:
- The app’s age
- It’s active users
- It’s potential for growth (a buyer will be significantly interested in this)
- It’s ratings and reviews
- The quality of the app’s code
- Detailed documentation of SOPs (standard operating procedures)
In addition to the variables listed above, answers to the following questions may also help you to understand the real price that buyers are willing to pay:
- Is your app based on a template, or does it have a unique design and technology?
- What is the number of organic installs?
- Are there any leverages available to increase the revenue of your app? If yes, you can either turn it into action that will significantly increase your selling price, or you can include these insights into your offer, and allow the buyer to implement them.
Finding a Buyer for Your App
If you want to make a sale, you need to be aware of what your buyer wants. This is only possible when you dive into their mindset and understand their perspective.
For example, it is vital to understand the buyer's due diligence process. This is important for the following reasons:
- To ensure that your information is accurate.
- To ensure that your financial statements and reputation reflect the actual value and nature of your business.
- To aid investors in vetting your business, as well as its profitability.
- To present relevant and appropriate information to prospective buyers to support decision-making.
Likewise, prospective buyers will likely scrutinize the following areas of your app:
- A reliable and user-friendly cloud hosting service.
- Relevant metrics, such as MAUs, DAUs of the apps sold.
- Customer feedback and testimonials.
- Cash flows generated over time.
If you’ve listed your business online with BusinessesForSale.com, you can still find alternative methods for vetting buyers.
Being the most popular and the largest professional network on the internet, LinkedIn gives you easy access to CEOs, CTOs, and Directors of different companies.
You can conduct your own research on acquirers, developers or other potential buyers that are searching for a product like yours. Send them an email detailing how your app offers solutions, and why it is valuable.
Hiring a broker is always a beneficial solution to find a buyer. If you don’t have the time to hunt down buyers yourself, a broker likely has sufficient contacts and networks to find a buyer for you.
Remember, no matter how valuable your business is, a buyer is likely to negotiate the conditions of the sale. Understanding the buyer’s perspective will not only save time when it comes to negotiations, but it will also show prospective buyers that you are serious.
It is essential that you prioritize your own interests during the negotiation stage. No doubt, app brokers can help you out in this and make things a tad bit easier for you. However, since their legal duties to you are limited, you need to play smart.
Since app buyers purchase apps all the time, they tend to have significant negotiation experience over you. So, before you get to the negotiations, it might be a smart move to consult your broker for professional advice on these types of transactions.
Usually, app purchasers tend to undervalues the app they're interested in. The prime reason behind this is to get a deal out of attractive programs offered by inexperienced sellers.
That being said, if you’re a novice in the bidding game, your best bet would be to receive many proposals and ask for assistance from your broker. This strategy will most likely get you closer to receiving a decent amount for your app.
Need Help Selling Your App?
With any business sale, there are always challenges. If you plan on doing it alone, it is crucial to conduct ample research before you list your business on the market. However, finding a broker to help you sell your business is always a smart move.
They have the expertise and market knowledge to find buyers, understand nuanced information and can free up your time so you can focus on sustaining the app until it is time to sign that dotted line.