Selling a company with no revenue
Hi, I am starting this thread to gather input and feedback on selling a company with no revenue.
So I started a company a few years ago that helps clients get citizenship by investment in the Caribbean countries of Saint Kitts, Saint Lucia, Dominica and Grenada. Along with residency by investment in US through the EB5 & E2 Visa, also in Canada via the Startup visa.
The company also helps clients form companies in US & Canada like LLC's, C-Corp and other entity types. I
Even though I have served clients in the past, the current LLC that I have hasn't registered any sales due to me being outside of the US to be with family.
The company has negotiated agreements for the all above mentioned services at a great price with B2B service providers who'll fulfill the client's requirements, the main job for the company is to market, find new clients and business development. I will be working with the new owner of the company to transition them to successfully run the business, this is included in the sale price.
I am trying to find a buyer for the company at the price of $55k. And my reason to sell it that I have no capital to deploy to pay for the business services or to keep the company up and running.
I would appreciate your input and feedback on the above mentioned situation and if it is even viable to try and sell a company with no revenue. All helpful and constructive feedback is welcome.
Alright... where do we start...
This falls into the area of an immigration consultancy, there are literally thousands of them.
1) Why is there no revenue at all? Like, it's zero? Over the entire time the business existed? For a company of this type, it won't matter if you reside outside of the US or inside. You can still bill your clients and get paid. I am guessing (I could be wrong), that you wanted the E2 visa yourself after starting this business and didn't get it (due to investment too low, didn't meet substantial income requirement, ...)- therefore you dropped the entire idea?
There are multiple ways to generate revenue here, either fees upfront for handling all the paperwork,or margin with the providers - or both. Or other ideas.
2) There is nothing proprietary about this business. Anyone can do this, from any location, you wouldn't even have to be based in the US. There are no IP, no assets (except maybe a website, laptop and a few small things). There is also no unique process that is more efficient or better than a competitor would do things, so franchising is out of the question as well.
3) Coaching/training a potential buyer is common when selling a small business.
4) How much capital would the buyer need to deploy all client acquisition and operations after purchase? That would be key here. I see ads for this all the time on apps, this is a marketing heavy proposition.
Here is an idea why the company might sell anyway:
1) If the buyer is international, eligible and willing - they might bite if the operation is extensive (databases, data, email lists, website presence, good/known brand, ..) and if they GET A VISA themselves. Like, if an European investor would receive the E2 with the purchase, it would be viable to a buyer who doesn't want to or can't do the legwork himself.
2) You indeed have some form of IP, process or agreements that are unique? Good B2B prices aren't really that unique, there are plenty of B2B providers that will take on new clients. If none of this exists, a lot, if not all of the information this consultancy would have can be found via Google.
3) You have existing clients that will provide income eventually, like a wait list, or people who have signed contracts and want to work with you.
4) What other services would the company be able to expand into? eBooks? data/knowledge about immigration? social media content about this topic? A unique way of attracting clients via apps or forums?
If none of the above are valid or possible, it would otherwise sound like you are asking for a high price for a failed business. And I don't want to say that without knowing the details. What exactly is the buyer getting for the price?
Travel to Asia (i.e. India) and every street corner has a poster with links and names to immigration consultants to the US, Canada or the UK. There are literally thousands of ads across all social media platforms. And they work for lower fees because their team is based in Asia. This is not a unique idea at all, IMO, but a very competitive space.
Immigration is a business area that is growing at the moment and there are many players entering this market. Some immigration legal firms also offer end-to-end services around these visa types for a flat fee.
1. I did serve clients in an individual capacity and with my Canadian company which was in operation for 2 years, after which I dissolved the Canadian company in October last year and formed a US LLC. I also lacked the capital to market and advertise that's why I didn't get any market traction.
2. The asset of company is the know-how and industry connections and knowledge that I have along with the media coverage that the company got in major national news outlets like AP News. Also most of the competitors are Dubai based, where there used to be most demand from expats because most middle eastern countries didn't provide citizenship to expats. The US and Canadian markets are relatively under-served so a fluent english speaker with cultural and tax knowledge would have an edge in the market, rest of the things being uniform like price which is fixed by the government and also the processing time which again is processed by the government.
3.I would also be willing to continue working with the new buyer after the transition in agreed upon terms.
4. There would be no upfront capital requirement other than buying price, the operations costs are quite low, around 1k a month, most of the budge as you rightly analyzed would go towards marketing and advertising, the new owner can also contract with introducers who can be payed on a commission basis to bring clients.
I didn't focus on getting clients as I lacked the capital to invest in marketing.
What would you propose would be a fair price if any for the business considering a single client for a Saint Kitts citizenship can bring 16-25k USD in net profit.
Again thanks a lot for your detailed response.
If the marketing investment is only 1K per month, it makes even less sense to not operate the business. This is a low amount for this type of enterprise - unless, you would need several months and several thousand dollar to acquire just one of the 16K clients. Without stepping too close to your personal life, if the investment amount is really only 1K, how would an entrepreneur lack funds this minimal? It is almost impossible to operate any business with less than 1K per month (unless it is some affiliate marketing, drop shipping, etc business).
The market for HNI investors (the addressable market) who are ..
- eligible from a legal point
- not barred from entry otherwise
- not on any sanctions lists
- also interested in making the investment for a visa
- focusing on the countries this enterprise is looking at
- and also want to own/operate a business or make the investment for residency (or similar)
...is not that large.
Just to give one example, for the EB5 option in an economically healthy part of the US, the investment amount is 1.9M $US plus the regional center fees, overhead, legal fees, regular life expenses, CapEx, OpEx, .. - how many people are there who are sitting on >2.1M liquid and who also want to work with just your company?
This is not a legal firm, so it won't even matter where it is based. Unless, this is a business which has brick-and-mortar offices where clients are meeting the owner? Wouldn't make any sense. The Dubai based firms can easily do this also, if they wanted to. This digital company only makes introductions and handles paperwork, not do anything themselves? (English fluency and a local presence is more relevant for legal firms, I am not sure how much a digital business has to be based in the US).
Know-how is relevant, but this also changes very frequently in the immigration sector due to new legislation, events like the pandemic or general changes the government introduces all the time.
The US, Canadian and UK markets are not underserved, they are just served by many different entities. Legal firms, angel investors, CVCs, VC, PE firms, Big4, agencies, consultancies, mobility providers, digital firms, ... - tax knowledge is useful, but anyone can offer tax advisory services.
Unless there is something I am missing here (like a strong youtube channel, a social media account, a huge pipeline of clients waiting, ..) - I don't see how this would be interesting to many buyers?
I'll give you about 3.50
Tree-Fiddy, you mean?
I was thinking the exact same thing haha
tiger global might give you a one billion dollar valuation if you just say SaaS or AI a few times
Yawn.....
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