Our bootstrapped startup has been approached by another company that is looking to acquire a company in our space. We are profitable and all the profits go to us so we need to come up with a price given our future cash flow from the business. I would love to get your input on how to come up with a price for our company.
If you have steady positive cash flows, expect them to value you based on a discounted cash flow with an expected terminal value. Typically a 5 year model is a good starting point. The good news is that those include a lot of assumptions, specifically around growth rates for revenue and expenses.
If you'd like to talk through common valuation techniques and get an idea of your company's worth, let me know. We can find a time to meet.
