My first product is < 1 year old and I've been contacted about its acquisition - any advice?

Not sure if you've had any discussions yet with the company who expressed an interest in acquiring your product, but here are some things to keep in mind.

• Make sure you know your monthly Net Income (profit, not top line revenue)

• Estimate the amount of time you spend doing Customer Service each week/month, and put some value to it

• Estimate the amount of time you spend coding it, and put some value to it

• Estimate the amount of time you do other operational activities, create a list of those activities

• Create some high level information about monthly traffic, top traffic sources, approximate conversion rate, and any information about what traffic seems to convert the best

• Try to envision what would be needed to acquire new customers (top line revenue), outside of just organic growth. Create a list of 2 or 3 ideas. Meaning, if you wanted to accelerate growth, what would be few things you'd try to do first

• Create a P&L (even a rough one) for your product business. If you're not doing proper bookkeeping, start

• Create a document that outlines everything above, and try to lay the information out in a logical sequence so that someone who doesn't know anything about your operation would have a pretty clear understanding after reading it. It doesn't have to be fancy, just easy to understand

• If you're worried about disclosing information, have them sign a Mutual Non-Disclosure

• Try to get a sense of the buyer. Meaning, what skills do they currently have that could be applied to your product business. The more internal skills they currently have, the less it will cost them to operate your product business if they acquire it. That can factor into the acquisition price

• During your discussion, write down every question they ask that is not already addressed in your document. Add it to your document after the discussion

• Valuations can range widely 20x - 40x monthly profit. It just depends on how attractive your product looks to the potential buyer

If you're seriously interested in selling your product business, consider listing it on a public marketplace (like flippa, microacquire, etc.) -- I have a list of them if you want them

If you'd like an example of a document I put together for one of my product businesses that I was considering selling, email me through my IH profile, and I'll be happy to share it.

Hope the info helps.

Separately, I looked at your site and was curious about something. You state the following:

Your license key is valid for one year from the purchase date. You need an active license key for continued access to automatic updates and support.

Does that mean they can keep using your product after the year period, so as long as they don't need support or updates?

If so, I'd recommend changing that -- because it's going to limit your revenue growth. Have the product stop working after a year, and require a new license key to keep using the product. Think of it like a SaaS -- if payment stops, they lose access to the service.

There's no point in selling a company just to get an "acquired" badge to be proud of.

I sold my business because I was sick of it after running it for ~6 years and I just wanted to do something new.

If you're still excited about building it (which I guess you are since it's still in its infancy) and you still see a growth potential (which you do). I would not sell it unless it was a crazy multiple.

Why don't you test the interest on microacquire.com (I think it's free to list). Depending on your growth rate you might be able to get a 5x multiple on your earnings. Maybe you could negotiate to sell part, or most of it and continue to be invested in it.