July 19th, 2010, 10:48 PM
Merging with/purchasing another company
I own a tiny company that develops software. I contacted a competitor with approximately the same size company as mine and initiated a conversation to transfer his customers to my company. A face-to-face meeting has not happened yet and I have a question about setting a price for an offer. First of all I will only "buy" his customers and I do know that there is a lot of thought that needs to take place in order to make sure that this owner will not turn against me after the transfer. I will go to lawyer at sometime to get advice and legitimize the deal.
The customers pay a monthly fee for support. Lets assume that the other company has 10 customers that pay $100/month for a total of $1,000/month. Their company is not growing by leaps and bounds and I assume that they are not happy with their growth potential.
How do I go about making a fair offer to them? Should I offer them a percent of their revenue, say 25%, and after two years or so give them a cash settlement, say two years worth of revenue?
Thanks for any suggestions.
September 1st, 2010, 12:48 PM
Maybe you should offer a preset amount of money for each client, it will be fair and good for you, as you will not have to deal with them regarding the clients in future.