Our guest today is Eric Owens. Since founding App Business Brokers in 2003, Eric has brokered the sale of hundreds of internet businesses and mobile apps. Those 18+ years of experience make Eric one of the foremost experts on helping small, bootstrapped entrepreneurs find qualified buyers and negotiate the sale.
In this episode, you’ll hear about:
David Barnard: https://twitter.com/drbarnard
Jacob Eiting: https://twitter.com/jeiting
Eric Owens: https://www.linkedin.com/in/ericowens/
(1:00) Eric and David have worked together before!
(1:25) How Eric became an app broker.
(5:09) The top reasons app developers decide to sell their businesses; capital gains taxes; David’s experience selling his first app.
(8:03) Why people buy app businesses.
(10:11) Do app buyers typically purchase successful apps or fixer uppers?
(13:35) The benefits of selling a successful app “prematurely;” David’s Mirror app.
(15:25) The challenges of selling iOS apps: iCloud, Passbook, Sign In with Apple, Catalyst; Gas Cubby.
(19:13) How app business valuations are calculated; the App Store Small Business program.
(23:34) Adding subscriptions to an app increases its value to buyers.
(26:51) What kind of documentation you should have in place before selling your app.
(28:34) How buyers approach purchasing an app from a solo developer.
(30:27) Finding app buyers.
(33:33) App business sales increased during the COVID-19 pandemic.
(34:00) The pros and cons of selling your app on your own; Flippa.
(39:17) Going through a broker helps you stay emotionally detached during the negotiation process.
(40:35) Fiduciary duties; representing app buyers versus sellers.
(42:38) What to watch out for during negotiations; low-ball offers; due diligence.
(48:17) The app sale closing process; escrow.com; closing costs.
(50:21) Brokerage fees; working with Eric.
(51:00) What comes after an app sale? Non-compete agreements; handoffs.
“Any business with any kind of subscription revenue is always going to sell for higher, no matter what it is. Buyers love that... The one move you can make in any business that will increase your valuation is to add some kind of subscription revenue.” - Eric
“As I get later in my life, [I’ve realized] brokers are amazing. Think about it: as an app developer, you spend 99% of your time being an app developer, right? And then you have this 1% critical action, which is the sale… It’s really useful to have somebody on your side who’s done this before and can tell you what you’re doing that’s wrong and what you’re doing that’s right.” - Jacob
“If you’re an inexperienced seller of something, get somebody to help you out.” - Jacob
“I forget what I paid Eric; it was probably $20,000 or $30,000. But to me, I saw it as worth every penny because he helped bring the market that got the highest and best value of the app… Having access to that pool of buyers and having Eric’s experience helping me walk through it, I think it made up the [cost] of whatever I paid him in the valuation that I got in the sale.” - David
“I’ve sold three apps, and it’s been huge for me. It’s helped pay off debt, it’s helped put a little money away, and helped me sleep better at night. There’s a lot of reasons to do it.” - David
“There’s a lot of people who can’t make [apps]. I think as indie app people, we just kind of take for granted — because we hang out on Twitter with a bunch of other people who know how to make apps — that it’s not that unique. And it’s a tough business; it’s not always easy to make an app that’s going to make you a lot of money. But if you factor in… the fact that not everybody can make these things, that can be a really useful tool for you to unlock liquidity earlier than you would otherwise.” - Jacob
“I think people should have the mindset… that you are building an asset that you can sell someday if you want to. You don’t ever have to, but build something that is sellable. If people can treat it more as an investment, that can see people through some of the dark times, the challenges of being an entrepreneur.” - Eric
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