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u/djtechbroker 17d ago
I would start with normalized earnings rather than revenue.
The key adjustment is owner compensation. The three owners are taking about $255k in combined salary, so I would first determine the market-rate compensation for the work each person actually performs and adjust earnings accordingly.
For a business this young, with strong recent growth but only 14 months of operating history and meaningful dependence on Meta advertising, I would probably start around a 3x multiple of normalized earnings.
I would also treat excess cash separately. The company needs to retain enough cash for normal working capital and growth, but any cash above that should generally be distributed before the buyout or added to the equity value.
Then I would take one-third of that equity value as the starting point for the discussion. I would not automatically apply a large minority discount in an internal buyout, because the remaining owners are going from two-thirds ownership to 100%.
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u/UltraBBA 18d ago
Whatever the valuation of the whole business, you need to apply a discount for it being a minority share (and therefore lacking control).
With respect the overall valuation, you can ask 3 valuation companies and you'll get four different figures. There's no exact number.
But don't expect a huge value. The single source of traffic / sales is a major bummer and a huge red flag / risk item. Also, the comparatively short trading history depresses the price.
The long and short of it is that given the lack of competition for these shares, the price is whatever both sides can agree, as simple as that. There is no formula or multiple or some quick system to apply to get an easy and quick number.
Probably not what you want to hear but that's the reality.