

As a Web Developer, how can I buy my client's business? - UKPHPWebDev

Over the past 3 years I have built and have been running an entire infrastructure for a client who I believe is selling his services to the wrong industry. Right now he is making $46k per month but in another industry with the right contacts he could easily be making $161k per month.<p>I believe I could purchase the infrastructure off of him which I could improve and maintain on an ongoing basis but to do this I would need to find the money to buy $276k of assets (book value) and someone with contacts in another industry.<p>I feel I need to act quick to get this deal but I have no idea where to go. I know the tech side of this inside out but I need some good people to partner with.<p>There is almost no risk because the purchase price is the value of the assets but I physically can&#x27;t do it on my own.
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davismwfl
Typically this is what you can take to high net worth people and discuss it
with them to help back you. That means you will instantly have 1 or more
partners, but it is doable.

Couple of other options, Leveraged Buy Out, where you purchase his business
over the period of say 1 year, during which time you guys split the net
income. These are tough to get right and have everyone see it as a win-win,
sometimes you give up 2-3 years of 50% net income, plus a 25-75% down payment.
The more amount of money you put in the better deal you get. A lot of small
businesses are sold this way, just not talked about a lot in the tech circles.

Combination of things, bank loan, home equity, friends and family and maybe 1
or 2 high net worth people. Again, you wind up with lots of details to work
through.

Last option, if you like this client, you could always try and partner with
him. OR cut a deal that says you will bring his product to market in another
industry and you want 75% of net income on it. You can even rebrand the
product sometimes if the client is willing. He may see it as a win-win as he
doesn't have all the risk to enter a new market, plus gets your attention to
make sure things are running tip-top. Remember its net income, so he'd still
pay you for upkeep of the current product within the market he is currently
in. But new features or rebranding would be on you for the other market.

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hias
Why do you think your client would sell you his business for the book value of
its assets if it allows him to make "additional" $46k per month?

Also, wouldn't your client also sell his services to this other industry if he
had the correct contacts? If you also do not have the correct contacts what
makes you think you can create them better or more easily than your client?

If you have developed the whole system anyway, why not build a new one using
your earned skills and experience?

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rubiquity
> _If you have developed the whole system anyway, why not build a new one
> using your earned skills and experience?_

One reason is integrity and the other is likely clauses in the contract he/she
signed with his/her client.

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zeusk
Also time, It is not so easy to just go build a copy of an already working
project. Getting the intricate stuff right is not so easy. + Reputation, He
would have to start off with a fresh customer base.

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dyeje
Why not offer a partnership? If you really do know how to triple the revenue,
then you would have a most compelling argument.

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geon
If there is no risk, it sounds like a good fit for a bank loan.

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zeusk
I guess he feels it would be hard to justify the no risk part to a bank and
its employees who aren't so familiar with the said business or industry.

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loumf
Banks are really good at understanding service businesses that have 46k of
monthly revenue and sell for 276k. Profit would matter too, so if the margin
is 50%, then we're looking at a ~11-month payback possibility.

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bnejad
Why not try to partner with your client in exchange for equity?

