Consumers download billions of apps each year, and consequently, these downloads generate billions of dollars.
In the third quarter of 2021 alone, there were:
- 27.8 billion Google Play store downloads, generating USD 12.1 billion.
- 8.3 billion Apple App Store downloads, generating USD 21.5 billion.
As the global appetite for mobile apps increases, so does the appetite of investors and buyers, meaning now is a great time to sell your application.
But to maximise your exit, you must understand factors like due diligence, finding ideal buyers, accurately valuing your business and more.
The good news is this post covers everything you need to know from when you first decide to sell your business until you sign the dotted line.
What Are the Reasons for Selling Your Mobile App?
Selling a mobile application can happen for any number of reasons:
- Your life circumstances may have changed, e.g. getting married, having a child, retirement.
- You see a better opportunity in another niche or industry.
- You feel like the business has reached maturity, and you can’t grow it further.
- You’re too busy on other projects.
Whatever the reason, you must prepare your business for the sale to maximise your exit.
- Start estimating the value of your mobile app or get an accurate valuation.
- Look at comparable apps that sold well and those that didn’t to see how you can improve your app.
- Ensure you have detailed business processes that the new owner can follow.
- Do your best to reduce the time investment your app requires from the owner.
- Implement strategies to improve key buying metrics, e.g. net revenue, churn (customer turnover), etc.
How Do You Accurately Value Your App?
Most apps will generally sell for between 2x - 3x annual net cash flow. If you’d like to understand more about the value of your app, you can conduct an accurate valuation online.
To determine the value of your app, you need to consider:
- Growth history and prospects
- Business process, e.g. marketing strategy, SOPs (Standard Operating Procedures), etc.
- Maintenance requirements
Depending on the complexity and size of your application, this list can become much longer and more intricate.
What Due Diligence Should You Conduct Before Selling Your Mobile App?
It’s crucial to understand due diligence from a buyer’s perspective to maximise your sale. After all, they’re the ones who will be paying for your app.
There are many factors that buyers pay attention to, including:
- An auditable financial track record.
- The app store listing’s search optimisation, rankings and reviews.
- Key metrics like LTV (Lifetime Total (Customer) Value), revenue and growth history.
- Source code and technology stack.
- Niche competitors
To prepare your application for sale, you should create a due diligence factors list and begin addressing them.
- Collate your financial history and business metrics into an easily readable report or digital dashboard. Having your history in one place makes it easy to find key metrics to improve and gives buyers an excellent overview of your business.
Finding the Ideal Buyer For Your App
Before you think about the ideal buyer, you need to figure out who would get the most value from your application.
- Simple apps with minimal owner involvement and lower revenues may be better for first-time buyers looking for passive income.
- Apps that require substantial owner involvement would be better for investors looking for a project or replacing their job.
- Complex applications in business-to-business sectors will be better for professional investors or companies looking to add to their offerings.
To determine whether buyers are a good fit, it’s a good idea to ask them about:
- Their experience in your niche and with mobile applications in general.
- How they plan to use the application.
- Their current business ventures.
- Why they want to purchase a mobile app.
Questions like these will help you determine who the serious buyers are and how you can best highlight the value of your mobile application.
What Should You Know About Closing the Deal?
In a perfect world, you’ll be able to sell your mobile app for an above-market price soon after listing. However, selling a business typically takes 6 - 11 months plus an extra few for closing.
In this time, you’ll likely face a few challenges before selling, including:
- Receiving a below-market offer for their app.
- Negotiations that fall through.
- Buyers that can’t secure funding.
To overcome these challenges, you must screen potential buyers early in the sales process. Ask them questions about how they plan to pay for your app and terms that are non-negotiable in the deal.
If they mention something that you’ll never agree to, it’s best to part ways before wasting more time.
How can BusinessesForSale.com Help You Sell Your App?
You can list your business with us. Alternatively, you can get support from a business broker, who can provide essential services to help you sell your business online.
By using a business broker, you can:
- Shorten the time it takes to sell your business.
- Find high-quality buyers that won’t waste your time.
- Receive a fair price for your mobile application.
- Avoid legal risks and scams.
- Focus on preparing your business for the sale.
Selling a business isn’t an easy feat, and it requires industry expertise to close deals. You can find a broker to help sell your business on our site.