We are a data and mobile app start-up based in the UK. We were in touch with a large brand initially about partnership but now they have said they would like to acquire us. However they want us to come up with business valuation. Our business is only a year old with small amount of traction, but strategically important to their business. They are the only bidders right now. How should we approach the negotiation and/or the initial valuation?
There are many factors in determining the correct strategy. It would be impossible for anyone to give you meaningful advice in a one post answer.
You need to analyze your position and the position of the acquirer, as well as the market in general before making decisions.
The focus of our business is representing early stage digital startups in M&A transactions with larger companies. The most common case is a smaller company with an app or widget which promises to return value on a per user basis and an acquirer with a larger user base that can more efficiently monetize the app/widget/platform.
We specialize in representing US, European and LatAm-based companies in discussions with US and International buyers. I am the co-founder of the largest Internet business accelerator in LatAm (www.NXTPLabs.com) and have successfully represented the seller in 8 such transactions in the past 24 months.
Let me know if you need guidance.