How to Value Software Buyout
We (my business partner and I) have a small company writing software in a niche industry. A consulting company has approached us to purchase a specific product we developed, for exclusive use by them. Up until now, we use our custom software to produce detailed analysis for the outside consulting company (we charge them, then they charge their clients directly) We have no experience in valuing the software for sale. We've been using our in-house GIS software to produce the reports, and over the last 5 years have had income of almost $700k. Anyone have suggestions on how we should go about putting a value on this software? They want exclusive rights to use it. I've read several articles on how to value software (note: source code will still be ours, in escrow). Some articles suggest either 3, 4, or 5 years of past billings/income to value the sale of that software. Any suggestions?