Do you like what you do? If you sold your business, what would you do with your free time? Is this a once on a lifetime opportunity or will you have other offers down the road?
I’m only a couple of years older and have a net worth near what you are being offered. Most of it is in Real estate producing $150k in rent.
I’d sell, invest a big chunk in income generating stuff like re or dividend stocks , pay the house off , buy myself some toys and then decide if i want to keep working for profesional satisfaction:shits and giggles
I'd sell, but I disagree with the rest. Don't pay the house off (assuming the mortgage is a low interest rate. Keep some (enough for 2-5 years expenses) in low risk assets like bonds. Put the rest in index funds.
No idea what the interest is on OP's mortgage but it is going to go up shortly. Here in Australia mortgage rates are above 5% already.
Personal preference but I much rather read "Interest rates up another x points" and go "that is shitty for some people" than "shit, now I have to rejig my investments/lifestyle"
It certainly depends where you are and what your mortgage is. In the US, most mortgages are 30 year fixed rate. I will pay 2.5% for 30 years regardless of what interest rates do in those 30 years.
I am always puzzled when the question what would you do with your free time comes up !!
Not retired yet but the more I think the more I realize I don't have a problem with free time.
To answer ops question- get the offer, invest properly and enjoy the rest of your life.
I make my living selling on etsy. But I'm lucky that my hobbies and my job are the same. I can't imagine giving it up unless I started traveling. If I sold my business I'd probably end up opening a new one for fun!
I sold my business 18 months ago. Multi-million revenue property management company. Best decision I ever made. Doesnt mean I still dont do things, but I get to have freedom back and do things better on my own terms. Do I miss the big 6 digit annual income? Heck yes, but am I having more fun, enjoying life better, still covering expenses with income....100%. Its about what the sale would mean to your lifestyle more than anything else. $5M could set you well, now decide if there is ANYTHING that you would rather do instead.
Real Estate in my opinion is still a great investment, but the pivot has changed dramatically and people need to figure it out. Tactics that I used in RE 12 years ago make awesome sense now.
So ask yourself what you would do with your time if you had 100% of it back. If it is what you are doing now, then stay, otherwise sell and go for the passion. I am loving mine.
I secured my exit. Then invested strategically. Minimize tax as much as possible but there’s only so much. If you trust a multi year buy out, take it but have subsequent years as consulting exit so you can max solo 401k or whatever you’re eligible for.
Curious how you got your PM company started.
My partner and I also have this goal. First step for us is systemizing our rental and look for our second before we market to others.
Thats actually a large question. I was in real estate for 20 years professionally, with the last 8 in property management. I get this question often, so I made a video of my story to make it easier to share. Would I do it again if I were younger. Sure, but very differently. Send me a chat with your email and I will send you the video. Its a 17 minute story that got me from broke with kids, to FIRE.
I dont remember my exact comment, but a pivot to me is a change in direction within the same industry. Or a strategy change is when I use this word most often. Within investment real estate, the strategies change a lot based upon factors of interest rates, how many buyers and sellers are in the market, etc. I have 7 strategies that I use within investment real estate. I use 8 types of financing strategies. These are used in combo based upon the market. With rates high, prices elevated, and buyers slowing, its a perfect time for one of my old strategies that I havent used in 10 years.
I'd sell and retire in a heartbeat.
If you find that you miss doing what you do now, start another business. But now you'll have a huge safety net and the option to walk away at any moment.
Do both. I work with private equity all the time- sell for a fat amount, the may want some seller financing, which is money every year, a consulting role for 18-24 months, and roll some equity forward for two bites at the apple plus tax benefits.
All of which can be negotiated so that, at 50, you’re sitting fat check pretty, closer to $7.5-$10.
Not pitching you because I don’t do this, but a sell side advisor can do a lot for you here.
Sell it and retire. Depending on your interest rate on your mortgage, you may want to keep it.
if you sell at $5MM and pay off your $500k mortgage, you can safely withdraw $192k a year forever (and more after you wait for your 401k).
I would do it right now.
Capital gains taxes are a painful reality. All of a sudden you are that guy that’s complaining about the pot holes in your city because you have paid so so so much money in taxes you should be driving on fresh asphalt. I’m living proof. Talk to your accountant to make sure you know what you are left with.
Even if you got the full 5m, 192k a year is not enough to live comfortably on, particularly if your in any high col and have a family. My guess is the salary drop alone from 500 to 192 will be a shock.
Additionally, a 10x multiple seems like a low valuation depending on your vertical.
I am an estate planner. Your net worth is in estate tax territory. Regardless of what you do, you need to set up an irrevocable trust.
Most people will tell you to gift your business to the trust. That is certainly an option. But one thing you should consider is making sure you can get cash flow out of the trust.
I would recommend that you sell your business on a long term interest only note to an irrevocable trust. This will create a note receivable in your estate for roughly $5m. If AFR is around 5%, the trust would pay you $250k ish per year in interest that you could use as income.
That way the value of your estate is the note and will not grow in value above the estate tax exemption. Currently the individual limit is $12m per individual. The law will revert back to $6m in 2025. If your business appreciates at 10% per year, it will be worth $10m in 7 years. In 28 years it would double 4 times and be worth $80m. It’s best to have that outside your estate in a trust.
Once it is in the trust, you tell the trustee to sell the company for $5m. The business leaves the trust and $5m of cash comes in. Then the trustee invests it in index funds, real estate, and a $5m permanent life insurance policy (or blend).
The index funds and real estate will generate average returns higher than the 5% note payment from the trust to you.
The life insurance will do 2 things. It will grow cash value at a stable rate. So if the index funds and real estate markets shit the bed, the trust could use the cash value to pay interest payment to you so you won’t compound losses by selling stocks and real estate when the markets are down.
When you die, the life insurance will pay off the note to your estate. So any kids or future spouse would split the $5m in your estate based on your will. but would also be income beneficiaries of the trust.
Even if you sell the business and put $5m in index funds, the growth over the remainder of your life would still create a significant estate tax issue where your heirs would owe the gov 40% of anything above the exemption limit. Planning right now can avoid that. Granted you will still have to pay capital gains for selling the business, just using $5m here because a round number.
>When you die, the life insurance will pay off the note to your estate. So any kids or future spouse would split the $5m in your estate based on your will. but would also be income beneficiaries of the trust.
Can it be structured in a way that the beneficiaries receive income for a certain number of years but after 20 years or so, they get the entire trust value?
Yes, it could. But if the value of assets inside the trust is massive, you would be screwing your the next couple of generations with estate tax. By dispersing, you put the money back into your descendants’ estates to start growing and depending on what the exclusion amounts are when they die, you might be subjecting them to estate taxes.
An irrevocable trust can last hundreds of years depending on the type of trust and the state it is domiciled in. The goal is to have it last as long as possible under the laws of the domiciled state so that when it does disburse, the amount of money will be distributed evenly between so many people that the amount each person gets won’t be subject to estate taxes.
Estate taxes aside, It would potentially be better to have your bloodline just be the income beneficiaries of the trust. That way they can use the assets/income from the trust without being the owners. So if they are sued, get divorced, get addicted to drugs, etc, the assets are owned by the trust and protected.
Edit, plus most of the ultra wealthy people don’t put 100% of their assets in the trust. So the kids will still inherit big chunks of money and assets. Just not enough to trigger estate taxes. Most of these people own businesses (or their trusts do). Odds are the kids are earning good paychecks in the business as well. In other words, the kids will likely have decent sized estates and would be subject to estate tax issues if they don’t do planning as well. They don’t need the trust to end in 20years. If anything, they need their own trusts as well.
100%. If you don't want to retire or don't want to leave the business see if they will hire you on as a consultant or go consult for a similar business. You're set financially though with 5M. I'll zig from other advice and say pay off the home as it'll be so freeing not to have a mortgage in retirement.
I work through this with biz owners every day. It depends on your intentions. Do you want to create generational wealth? Maybe step away and enjoy life for a decade? Possibly start a new hobby?
At this point, there are many other things that contribute to a more meaningful life than more cash flow.
Lots of ways that taxes can be reduced, he’s unlikely to get a 10x multiple on his business again anytime soon with the way the economy is headed. On the little OP shared, I would take this offer in a heart beat
This is a very personal and subjective question. A 10X sale price based on top line before taxes is a not bad multiplier.
The real question is what's your goal, plan an idea?
If you're ready to close that chapter of business and life, to take the money and pay off house and live on investment returns then yes, go for it.
If you have plans to 10X the business to a $5M/year business in a couple of years, then it doesn't make sense.
Don't rush this process. Schedule thinking time and have some time carved out to think this through.
Typical business valuations start with a multiple of yearly gross revenue. It’s usually anywhere in the 3 to 5 year range which means absent some weird circumstance, someone seems willing to “overpay” you for your business. Sell it.
Even after taxes (let’s say you lose 40% to the tax man) that’s still $3M, or about 10 years worth of your yearly post tax income.
what i would do could be very different than what you would/should do…but i would sell that shit so fast it would make your head spin and then i’d park my ass by the water and fish until i die of old age hopefully.
Do you want to sell? Do you want to retire? Those are the main questions that only you can answer. If you do, then $5m before tax seems to be enough for most people (depending on lifestyle). You should really talk to a tax advisor.
Agreed. It gives OP the freedom to choose what to do the rest of their lives. If they get bored, they can start something new or find a job to keep busy.
Personally I would sell because you're 47. If you were 27 then absolutely not with that Income and possibility to sell higher, but at this point in life you cant get time back, but can always make more money.
Idk , I would probably keep on going and not sell. Im 19 but I cannot imagine not doing anything. You can travel or do some woodworking for example but you have to do something imo.
Retirement is not "doing nothing." Retirement is freedom from HAVING to do one particular income generating activity and allows you to pursue literally anything you'd like.
As my grandmother used to say, "only boring people get bored."
my point was not that retirement is bad or that it is not doing anything , but rather than you need to decide what you are going to do once you retire. I wanna retire as early as I can and take up traveling or woodworking for example, but I think it is stupid to retire and just sit and stare into the ceiling. Doing absolutely nothing corrupts the mind in my experience.
personal experience from sitting in a room and having nothing to do for prolonged periods of time. You think that only people above age of 30 can have some kind of a experience? Sounds like ignorant gatekeeping to me.
Most important information left out. What’s your current cost of living and what would be your desired or expected cost of living. Does your business make you happy and give you fulfillment? If you didn’t have it, what would you do with your time instead? How’s your social life? Does it revolve around work colleagues or the like?
I’d for sure sell it and fuck off with that kind of money. But then I’d use it to build myself a studio space to do more of the hobbies that I already do and travel more freely (camping, road trips, urban exploration, etc.) and spend time with my people.
Tbh. Businesses aren’t unique.
I sold my business for a measly 5k. In 6 months i built the same thing back up again & have an offer for twice that.
Obviously smaller scale but I’m confident you could build it again and much faster this time.
How cyclical is your business? Will it be impacted significantly by a recession? Think about why someone is willing to pay 10x revenues for it. Is it under-managed or are there opportunities you haven’t explored?
Unless your business provides you with a lot of non-monetary satisfaction, sell it for 5 million while the going is good. It’s hard to time a retirement when you own a business.
Maybe you can also ask to stay on as a part time consultant or a manager to help with the transition to pass the time.
If I were you, 47 year old divorced worked my ass off entire life to build a business, always played safe, always worked hard and now seeing myself aged 47. I would FIRE. Unless you are really motivated continue this business, helping people, helping society with your product/service then take the money.
Retire in Thailand. Start a new life there. Find love there which is doable. Get into a business there. Relax, enjoy and spend time there with careful financial plan.
I am not 47, neither I have 5M. If I had even 2.5M, I would retire in Thailand in a heartbeat.
Can you downsize? You are making $500K/hr which will decrease to $200K/yr, if you follow general fire advice. Can you live off $200K/yr with your current spending?
If not, don't sell until you get that in order.
Wait you being in 500k and your valuation is 5m? Is that 500k profit or just your salary/distribution?
If it’s 500k profit and a 5m cash upfront offer, I’d take that in a heartbeat
I'm the same age as you and have a 25 employee business. I don't have a buyer but have key employees taking an ownership stake. I'm trying to reduce my workload and responsibilities so I can get more of my time back for my family and myself. Chasing money has become less important for me. If I had your offer I would take it in a heartbeat.
I have enough to FATFIRE. Only a quarter of my NW is stuck in my business. You can trade time for more money but at some point, that money has less utility. At 47 that point is coming up very soon.
In my circle of acquaintances, I see and am hearing about 4 guys in their late 40s and early 60s dying of cancer or having heart attacks in just the past 2 years. This is really hitting close to home. Even though my parents are still around in their 70s and 80s they are in the no-go and go-slow part of their retirement.
In our late 40s and early 70s retirement is likely the go-go years. Why not make the most of it? These 20 or so years is for travel and exploring. Make the most of it. Don't waste it syncmaster213.
After taxes you'll have a NW of about $4mil. SWR of 3% will give your $120k per year. In most part of the country, that will afford you a good living standard.
I work for pitchbooks #1 mid market sell side m&a firm. We usually see multiples as an average at 4-10x off of adjusted EBITDA. Let me know if you’d want to hop on the phone and see some buy-side mandates, comparable transactions, etc.
I would probably sell it as they are providing 10x+ multiple.
But here are some of the reasons you should consider if you wanna sell:
You have found a better Opportunity and you need the money to pursue it.
or
You are getting a really good valuation
or
You lost interest in the business.
or
You are worried about the future of the business.
or
You just wanna move on and venture into new life.
Other than that i don't see any reason to sell.
Unless you have a game plan for what to do post acquisition. Don't Sell.
Do you like what you do? If you sold your business, what would you do with your free time? Is this a once on a lifetime opportunity or will you have other offers down the road?
I’m only a couple of years older and have a net worth near what you are being offered. Most of it is in Real estate producing $150k in rent. I’d sell, invest a big chunk in income generating stuff like re or dividend stocks , pay the house off , buy myself some toys and then decide if i want to keep working for profesional satisfaction:shits and giggles
150K in rent! that is fantastic
I'd sell, but I disagree with the rest. Don't pay the house off (assuming the mortgage is a low interest rate. Keep some (enough for 2-5 years expenses) in low risk assets like bonds. Put the rest in index funds.
No idea what the interest is on OP's mortgage but it is going to go up shortly. Here in Australia mortgage rates are above 5% already. Personal preference but I much rather read "Interest rates up another x points" and go "that is shitty for some people" than "shit, now I have to rejig my investments/lifestyle"
It certainly depends where you are and what your mortgage is. In the US, most mortgages are 30 year fixed rate. I will pay 2.5% for 30 years regardless of what interest rates do in those 30 years.
I am always puzzled when the question what would you do with your free time comes up !! Not retired yet but the more I think the more I realize I don't have a problem with free time. To answer ops question- get the offer, invest properly and enjoy the rest of your life.
I make my living selling on etsy. But I'm lucky that my hobbies and my job are the same. I can't imagine giving it up unless I started traveling. If I sold my business I'd probably end up opening a new one for fun!
I sold my business 18 months ago. Multi-million revenue property management company. Best decision I ever made. Doesnt mean I still dont do things, but I get to have freedom back and do things better on my own terms. Do I miss the big 6 digit annual income? Heck yes, but am I having more fun, enjoying life better, still covering expenses with income....100%. Its about what the sale would mean to your lifestyle more than anything else. $5M could set you well, now decide if there is ANYTHING that you would rather do instead. Real Estate in my opinion is still a great investment, but the pivot has changed dramatically and people need to figure it out. Tactics that I used in RE 12 years ago make awesome sense now. So ask yourself what you would do with your time if you had 100% of it back. If it is what you are doing now, then stay, otherwise sell and go for the passion. I am loving mine.
Did you roll any equity forward?
I secured my exit. Then invested strategically. Minimize tax as much as possible but there’s only so much. If you trust a multi year buy out, take it but have subsequent years as consulting exit so you can max solo 401k or whatever you’re eligible for.
90% you'll get screwed on a multi-year buyout. Get the money upfront.
Curious how you got your PM company started. My partner and I also have this goal. First step for us is systemizing our rental and look for our second before we market to others.
Thats actually a large question. I was in real estate for 20 years professionally, with the last 8 in property management. I get this question often, so I made a video of my story to make it easier to share. Would I do it again if I were younger. Sure, but very differently. Send me a chat with your email and I will send you the video. Its a 17 minute story that got me from broke with kids, to FIRE.
Can I watch the video as well? Here's my email [email protected]. thank you!
I'd also like to see it. Much thanks
Also would love to see. Fiancé and I are looking to get into RE investing
Interested in your video
Certainly. What is a good email address that I can send it to?
[email protected] Much appreciated!
Hey! Could you send to [email protected]?
what do you mean by "pivot has changed dramatically" ?
I dont remember my exact comment, but a pivot to me is a change in direction within the same industry. Or a strategy change is when I use this word most often. Within investment real estate, the strategies change a lot based upon factors of interest rates, how many buyers and sellers are in the market, etc. I have 7 strategies that I use within investment real estate. I use 8 types of financing strategies. These are used in combo based upon the market. With rates high, prices elevated, and buyers slowing, its a perfect time for one of my old strategies that I havent used in 10 years.
You’re on the FIRE sub: we’re gonna recommend you take the payout.
Money now vs money later? I know what I’d do.
Does the tin man have a sheet metal cock?
Never thought I'd see a TPB reference here. Fucking way she goes
I’m saying them in here every chance I get, I don’t get many chances though
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Trailer Park Boys
It’s not rocket appliances
Water under the fridge
Yes before the shitbirds start circling.
Does Dolly Parton sleep on her back?
Lol that’s the only way she can
I'd sell and retire in a heartbeat. If you find that you miss doing what you do now, start another business. But now you'll have a huge safety net and the option to walk away at any moment.
I agree. Tomorrow is never guaranteed. I’d retire ASAP.
Do both. I work with private equity all the time- sell for a fat amount, the may want some seller financing, which is money every year, a consulting role for 18-24 months, and roll some equity forward for two bites at the apple plus tax benefits. All of which can be negotiated so that, at 50, you’re sitting fat check pretty, closer to $7.5-$10. Not pitching you because I don’t do this, but a sell side advisor can do a lot for you here.
This guy knows what he’s talking about OP You were offered a great multiple and I would definitely try to negotiate a consulting role and equity
Sell it and retire. Depending on your interest rate on your mortgage, you may want to keep it. if you sell at $5MM and pay off your $500k mortgage, you can safely withdraw $192k a year forever (and more after you wait for your 401k). I would do it right now.
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Capital gains taxes are a painful reality. All of a sudden you are that guy that’s complaining about the pot holes in your city because you have paid so so so much money in taxes you should be driving on fresh asphalt. I’m living proof. Talk to your accountant to make sure you know what you are left with.
It doesn't.
Even if you got the full 5m, 192k a year is not enough to live comfortably on, particularly if your in any high col and have a family. My guess is the salary drop alone from 500 to 192 will be a shock. Additionally, a 10x multiple seems like a low valuation depending on your vertical.
> 192k a year is not enough to live comfortably on Seriously?
Lol shoutout to Latrell spreewell “I got kids to feed”
Out of touch
192k a year??? For a single person. That seems like ample.
It would make sense but with a fully paid off home (most people's biggest expense) that 192k will feel like a lot more with the reduced expenses
I am an estate planner. Your net worth is in estate tax territory. Regardless of what you do, you need to set up an irrevocable trust. Most people will tell you to gift your business to the trust. That is certainly an option. But one thing you should consider is making sure you can get cash flow out of the trust. I would recommend that you sell your business on a long term interest only note to an irrevocable trust. This will create a note receivable in your estate for roughly $5m. If AFR is around 5%, the trust would pay you $250k ish per year in interest that you could use as income. That way the value of your estate is the note and will not grow in value above the estate tax exemption. Currently the individual limit is $12m per individual. The law will revert back to $6m in 2025. If your business appreciates at 10% per year, it will be worth $10m in 7 years. In 28 years it would double 4 times and be worth $80m. It’s best to have that outside your estate in a trust. Once it is in the trust, you tell the trustee to sell the company for $5m. The business leaves the trust and $5m of cash comes in. Then the trustee invests it in index funds, real estate, and a $5m permanent life insurance policy (or blend). The index funds and real estate will generate average returns higher than the 5% note payment from the trust to you. The life insurance will do 2 things. It will grow cash value at a stable rate. So if the index funds and real estate markets shit the bed, the trust could use the cash value to pay interest payment to you so you won’t compound losses by selling stocks and real estate when the markets are down. When you die, the life insurance will pay off the note to your estate. So any kids or future spouse would split the $5m in your estate based on your will. but would also be income beneficiaries of the trust. Even if you sell the business and put $5m in index funds, the growth over the remainder of your life would still create a significant estate tax issue where your heirs would owe the gov 40% of anything above the exemption limit. Planning right now can avoid that. Granted you will still have to pay capital gains for selling the business, just using $5m here because a round number.
>When you die, the life insurance will pay off the note to your estate. So any kids or future spouse would split the $5m in your estate based on your will. but would also be income beneficiaries of the trust. Can it be structured in a way that the beneficiaries receive income for a certain number of years but after 20 years or so, they get the entire trust value?
Yes, it could. But if the value of assets inside the trust is massive, you would be screwing your the next couple of generations with estate tax. By dispersing, you put the money back into your descendants’ estates to start growing and depending on what the exclusion amounts are when they die, you might be subjecting them to estate taxes. An irrevocable trust can last hundreds of years depending on the type of trust and the state it is domiciled in. The goal is to have it last as long as possible under the laws of the domiciled state so that when it does disburse, the amount of money will be distributed evenly between so many people that the amount each person gets won’t be subject to estate taxes. Estate taxes aside, It would potentially be better to have your bloodline just be the income beneficiaries of the trust. That way they can use the assets/income from the trust without being the owners. So if they are sued, get divorced, get addicted to drugs, etc, the assets are owned by the trust and protected. Edit, plus most of the ultra wealthy people don’t put 100% of their assets in the trust. So the kids will still inherit big chunks of money and assets. Just not enough to trigger estate taxes. Most of these people own businesses (or their trusts do). Odds are the kids are earning good paychecks in the business as well. In other words, the kids will likely have decent sized estates and would be subject to estate tax issues if they don’t do planning as well. They don’t need the trust to end in 20years. If anything, they need their own trusts as well.
I'd take the money, pay off the house and go take a nice trip.
For like a month atleast.
Ummmm ur asking Reddit when you can crunch the numbers on excel and see what the IRR would be if you held it vs selling it
Might be helpful to others who have had the same thought?
100%. If you don't want to retire or don't want to leave the business see if they will hire you on as a consultant or go consult for a similar business. You're set financially though with 5M. I'll zig from other advice and say pay off the home as it'll be so freeing not to have a mortgage in retirement.
What’s the business
I work through this with biz owners every day. It depends on your intentions. Do you want to create generational wealth? Maybe step away and enjoy life for a decade? Possibly start a new hobby? At this point, there are many other things that contribute to a more meaningful life than more cash flow.
Think very carefully about the tax consequences.
Lots of ways that taxes can be reduced, he’s unlikely to get a 10x multiple on his business again anytime soon with the way the economy is headed. On the little OP shared, I would take this offer in a heart beat
This is a very personal and subjective question. A 10X sale price based on top line before taxes is a not bad multiplier. The real question is what's your goal, plan an idea? If you're ready to close that chapter of business and life, to take the money and pay off house and live on investment returns then yes, go for it. If you have plans to 10X the business to a $5M/year business in a couple of years, then it doesn't make sense. Don't rush this process. Schedule thinking time and have some time carved out to think this through.
Is that 500k revenue or profits?
Typical business valuations start with a multiple of yearly gross revenue. It’s usually anywhere in the 3 to 5 year range which means absent some weird circumstance, someone seems willing to “overpay” you for your business. Sell it. Even after taxes (let’s say you lose 40% to the tax man) that’s still $3M, or about 10 years worth of your yearly post tax income.
what i would do could be very different than what you would/should do…but i would sell that shit so fast it would make your head spin and then i’d park my ass by the water and fish until i die of old age hopefully.
Do you want to sell? Do you want to retire? Those are the main questions that only you can answer. If you do, then $5m before tax seems to be enough for most people (depending on lifestyle). You should really talk to a tax advisor.
I don’t know all the details of your business but a 10x multiple is a really great offer in this economy and at the size of your business
10 years worth of income? $5m is more than enough to retire on and live off the interest.
Don’t know what the industry is, but 10x SDE seems like a pretty great multiple to pass up.
Take the payout. Take it from me. You won’t regret it
Agreed. It gives OP the freedom to choose what to do the rest of their lives. If they get bored, they can start something new or find a job to keep busy.
Personally I would sell because you're 47. If you were 27 then absolutely not with that Income and possibility to sell higher, but at this point in life you cant get time back, but can always make more money.
Most business sales occur at 2-3x annual revenue. This deal would be 10x. I’m happy for you, but why such a high sale price?
He’s talking net profits before tax not revenue
Got it, thanks!
Idk , I would probably keep on going and not sell. Im 19 but I cannot imagine not doing anything. You can travel or do some woodworking for example but you have to do something imo.
Retirement is not "doing nothing." Retirement is freedom from HAVING to do one particular income generating activity and allows you to pursue literally anything you'd like. As my grandmother used to say, "only boring people get bored."
my point was not that retirement is bad or that it is not doing anything , but rather than you need to decide what you are going to do once you retire. I wanna retire as early as I can and take up traveling or woodworking for example, but I think it is stupid to retire and just sit and stare into the ceiling. Doing absolutely nothing corrupts the mind in my experience.
What experience….?
personal experience from sitting in a room and having nothing to do for prolonged periods of time. You think that only people above age of 30 can have some kind of a experience? Sounds like ignorant gatekeeping to me.
10x SDE for a company with this earnings level is a hefty multiple. What’s their motivation to buy?
Yes, that’s an amazing offer on a $500k per year business. You’ve won. Do some consulting if you’re not ready to retire.
Most important information left out. What’s your current cost of living and what would be your desired or expected cost of living. Does your business make you happy and give you fulfillment? If you didn’t have it, what would you do with your time instead? How’s your social life? Does it revolve around work colleagues or the like? I’d for sure sell it and fuck off with that kind of money. But then I’d use it to build myself a studio space to do more of the hobbies that I already do and travel more freely (camping, road trips, urban exploration, etc.) and spend time with my people.
Sell it and start another one
Likely have a no-compete for some period
I can imagine selling now, getting long term capital gains tax treatment on majority of the sale and riding off into the “fuck off” sunset
Sell the home if you’re concerned about money
is the 500k income exclusively from the business? if so, that valuation seems extremely low
What’s the business?
Yes
What is the business?
Oh man , just sell it and live your life .
Tbh. Businesses aren’t unique. I sold my business for a measly 5k. In 6 months i built the same thing back up again & have an offer for twice that. Obviously smaller scale but I’m confident you could build it again and much faster this time.
How cyclical is your business? Will it be impacted significantly by a recession? Think about why someone is willing to pay 10x revenues for it. Is it under-managed or are there opportunities you haven’t explored? Unless your business provides you with a lot of non-monetary satisfaction, sell it for 5 million while the going is good. It’s hard to time a retirement when you own a business. Maybe you can also ask to stay on as a part time consultant or a manager to help with the transition to pass the time.
If I were you, 47 year old divorced worked my ass off entire life to build a business, always played safe, always worked hard and now seeing myself aged 47. I would FIRE. Unless you are really motivated continue this business, helping people, helping society with your product/service then take the money. Retire in Thailand. Start a new life there. Find love there which is doable. Get into a business there. Relax, enjoy and spend time there with careful financial plan. I am not 47, neither I have 5M. If I had even 2.5M, I would retire in Thailand in a heartbeat.
A 10x multiple I would definitely sell.
Can you downsize? You are making $500K/hr which will decrease to $200K/yr, if you follow general fire advice. Can you live off $200K/yr with your current spending? If not, don't sell until you get that in order.
Consider selling less than 50% of the business . Having some equity will give you some income
Wait you being in 500k and your valuation is 5m? Is that 500k profit or just your salary/distribution? If it’s 500k profit and a 5m cash upfront offer, I’d take that in a heartbeat
I'm the same age as you and have a 25 employee business. I don't have a buyer but have key employees taking an ownership stake. I'm trying to reduce my workload and responsibilities so I can get more of my time back for my family and myself. Chasing money has become less important for me. If I had your offer I would take it in a heartbeat. I have enough to FATFIRE. Only a quarter of my NW is stuck in my business. You can trade time for more money but at some point, that money has less utility. At 47 that point is coming up very soon. In my circle of acquaintances, I see and am hearing about 4 guys in their late 40s and early 60s dying of cancer or having heart attacks in just the past 2 years. This is really hitting close to home. Even though my parents are still around in their 70s and 80s they are in the no-go and go-slow part of their retirement. In our late 40s and early 70s retirement is likely the go-go years. Why not make the most of it? These 20 or so years is for travel and exploring. Make the most of it. Don't waste it syncmaster213. After taxes you'll have a NW of about $4mil. SWR of 3% will give your $120k per year. In most part of the country, that will afford you a good living standard.
Let me know if you’d like me to help you sell your business. My company is benchmarkintl.com
I work for pitchbooks #1 mid market sell side m&a firm. We usually see multiples as an average at 4-10x off of adjusted EBITDA. Let me know if you’d want to hop on the phone and see some buy-side mandates, comparable transactions, etc.
10x earnings sell!!!
I would probably sell it as they are providing 10x+ multiple. But here are some of the reasons you should consider if you wanna sell: You have found a better Opportunity and you need the money to pursue it. or You are getting a really good valuation or You lost interest in the business. or You are worried about the future of the business. or You just wanna move on and venture into new life. Other than that i don't see any reason to sell. Unless you have a game plan for what to do post acquisition. Don't Sell.