What is the Value of Your Kinkbomb Business?

Dear Studios,

Recently, a few studio partners have inquired as to what their value is at Kinkbomb.com.

For instance, if a studio were to be offered a compensation to close their KB studio, what should that payoff be?

The answer is 30x-40x your monthly revenue. If someone were to offer less than 20x your monthly revenue, then that potential buyer is trying to take advantage of you.

 In the past twenty years I have owned or been an executive in dozens of companies in multiple industries. Many of those businesses involved buying and/or selling contracts or entities. Every business has a value based on different factors. For instance, if you own a McDonalds franchise that earns you $100,000 a year, would you sell it for $50,000? I certainly wouldn’t, but what would be an appropriate offer; $300,000, $500,000, $1,000,000? Technology companies because of the difficulty to build the technology (also called a “moat”), have much higher valuations while service industries that rely on specific partners such as doctors’ offices or law firms have much lower valuations.

I would compare a studio’s business to a service industry with a technology aspect. This vertical market would easily trade in the 30x-40x monthly revenue or 3x annual.

Studios on Kinkbomb.com have content, marketing, track record, repeat customers, and many other attributes that give your studio intrinsic value. If you close your business at Kinkbomb, there is no guarantee that all or part of that lost revenue would convert to a new location. In addition, the more you limit your venues to sell product, the more you leave yourself vulnerable to a lack of redundancy. If something tragic happened to the executive team of a company, if their site was irretrievably broken by hackers, or if a disgruntled employee simply pulled the plug, anyone that had all their eggs in that basket would be financially crippled.

Your business has more value because it is spread out, and loses value the more risk you accumulate. If you have one store in one mall, and that mall is hit by a tornado, then your business is gone. If you have three stores in three malls, and one is destroyed, you can overcome and rebuild.

This is also the reason KB has never required exclusivity or even suggested it. KB is a tool for studios to use to grow their business. Studios should have as many tools in their tool belt as possible.

If you have any additional questions or concerns about this issue, you can post in the blog and/or email me direct at Joshua@kinkbomb.com.


Team Kinkbomb