How to sell an open-source software company?

Many years ago a similar question came up on HN, I summarized all the responses and added some of my own experience to the article:

https://jacquesmattheij.com/how-to-sell-your-company/

Hope it is useful to you. Best of luck with the sale!

What, in this case, is “a profitable open-source software company”? I.e. what is your exact business model? To be precise, when your customers pay you, what do they expect, and recieve, in return? This could be consulting, bespoke development, etc. That, whatever that is, is your company, not “open source”. The fact that you publish some code as open source is mostly irrelevant. No company is “an open source company”, they are instead companies with business models which allow them to publish source code under open and free licenses. A woodworking shop could be such a company if they also publish whatever software they write (during the course of their normal work) under open and free licenses.

In other words, open source is not a business model¹.

1. https://news.ycombinator.com/item?id=30291919#30292595

I sold an open source company in 2015 - video log [1].

I generally found the open source nature more of a liability. One which I could not ignore because our project was very public. The approach I took was to acknowledge questions like “what IP acts as your differentiator?”, diffused it and talked about the business itself. Being subject matter experts in the software was a big selling point because it was a hedge against them taking the source (Apache or MIT licenses - I forget) and using it themselves.

Not sure what value you provide beyond the source code but that’s something you can sell - being open source is not a feature when it comes to acquisition or sale of a company, IMO.

[1] https://jaisenmathai.com/openphoto-trovebox/video-log/

For what it is worth, I don't think it matters much that the business is open source.

It just means that it is not the right business for one group of people versus being not the right business for a different group.

Both groups being approximately everyone of course.

Anyway, Patio11's podcast about selling Bingo Card Creator might provide some perspective: https://www.kalzumeus.com/2016/08/26/kalzumeus-podcast-episo...

Good luck.

If your business is profitable, normally it should not matter that it's open-source. If you post your ARR and type of business, you might find potential buyers even here.

It's hard for folks here to give you the best advice without more details. I remembered seeing your name before and found brix.io, now coreui.io. Not sure if that's what you are selling, but it looks like it has ok traffic stats from a quick check : 80k monthly traffic, 140k backlinks (40k with anchor text of 'bootstrap themes'). No idea what your conversion rate or ARR is. I suggest posting the answers to the following questions:

- What are the traits the ideal buyer would have and why?

- What are your metrics (conversion rate, ARR, EBITDA and margin, sales backlog, year over year growth, etc.)?

- Who is your competition, and how well are they doing (absolute and relative to your company)?

- What differentiates you from your competition, in terms of assets/talent/IP?

- What is your vision of where the company could go from here?

- Why are you selling it?

Your history has a lot of posts about your product, so I'm guessing you don't need to leave people guessing here. For anyone wondering, the company in question is https://coreui.io

This broker might be of interest:

https://feinternational.com/

Best of luck!

i've bought open source software companies before and without revenues you are useless. there's this idea that github stars and # of downloads mean something here, hate to break it to ya but they aren't worth much

the rules/valuations of open source companies are no different than closed source ones, in fact, it will be harder to justify any sort of valuation because the code is widely available. Once you go away, another fork or iteration will spring up. Tougher when the insane multiples we enjoyed thanks to low interest rate is gone.

You are better off trying to build the company but you probably already did that.

Advertise it.

Potential buyers will want to know what software is sold, how many customers it has, past and current financials, etc.

They will also be interested in what price you are asking and details about how ownership will be transferred.

Try getting a free business valuation from FE International. They don't take a commission until it sells, and their success rate is over 94%. https://loom.ly/dWyvw2w

there is microacquire.com or similar sites where you can list your company for sale.

Submit it and see what type of responses you'll get!

https://www.sideprojectors.com

What are the numbers bebhind the busniess? What is ARR, number of customers, team size. My friend is looking for a business with templates.

You are going to have a hard time selling if your code is incorporating open source libraries.

Standard M&A D&D is to see how defensible the codebase would be and determine IP.

The buyer can be buying several things: 1) Ip 2) people/knowhow 3) customers 4) cash flow

It sounds like you dont have 2. You may not have 3 if you are not doing sticky b2b enterprise sales with low churn. If you are selling your baby, that means the juice is not worth the squeeze and thus 4 is low.

That leaves 1. Do you have IP?

If you are using open source, you are going to have a hard time shopping it. You need a technical buyer to know what they are getting into.