Congradulations on your successful start-up!
How about between $10-12 million? That is based loosely on a multiplier of the annualized profit after the first quarter.
There are so many variables to consider here that the number above is worth as much as the pixels that were rearranged to convey it to you. Even a little more information about the nature of the past revenue contracts, the assumptions behind the projected 2011 revenue, the value of the market segment that your software is in, the viability of the scalability of 50% profit margin, season adjustments for annualizing first quarter revenue will all provide greater details which will determine what a good multiplier would be, and for whether it should be on profit/revenue or a mixture of both.
There are lots of different models for valuation. Which do you and your partner think best reflects that business model?
- Capitalized Earning Approach
- Excess Earning Method
- Cash Flow Method
- Tangible Assets (Balance Sheet) Method
- Costs to Create Approach
- Value of Specific Intangible Assets
Most people will probably agree upon some mixture of these -- that mixture will be unique to your business, market and customers.
There is a entire software catagory of business valuation software. There is an entire industry of professionals that appraise businesses. They even have their own specialized accredidation. Doesn't everyone? :)
I know you were just looking for a ballpark figure right now, but I strongly recommended leveraging an agreed upon third party for the actual valuation.