Part 4: Practicalities for navigating the app market
Continuing our series Selling your app: A guide to a successful exit, we’re looking at the practicalities around selling your app, which will help you prepare for discussions with buyers as well as the process of selling.
Read our last installment on App Valuations here and look out for the next two blogs on Routes to exit and the Checklist for selling your app. Everything you need to know to make a successful deal for your app.
Practicalities for navigating the app market
Your experience selling your app will be much smoother if you have an idea of the process, what the buyer will be looking for and how you can supply that information. This will help you navigate the app market and make it work for you.
When you are selling an app, four key assets are typically changing hands:
- Source code
– This is one part of the app being sold – but you could also sell or license it in its own right
- The app’s account on Google Play or the App Store
– This equals the user base – you will need to transfer the account to the new owners
- Your revenue stream
– In-app purchases and advertising (e.g. Admob, Facebook audience, InMobi)
– Note that it can be tricky isolating a single app if you use a mobile advertising solution for a portfolio of apps
- Intellectual property (IP)
– Anything directly related to the app: rights, licenses, trademarks, websites, social media accounts
– How much of this is included depends on the buyer and the deal – if you are only selling your app on one platform and keeping it on others, it may not be included
Prospective app buyers will expect to be able to review the data that backs up the claims you make about your app. This is only natural: You wouldn’t buy a car without having proof of the vital statistics or buy a house without getting a survey done. The app market is no different. This data is a key part of what the app buyer will use to estimate the value of your app.
Expect to be asked for proof of at least:
- Different aspects of the app’s user base
- Revenue (advertising and in-app purchase)
Buyers on the app market will often want screenshots or access to tools such as the Google Play Developer console. You can grant them ‘view only’ access so that they can see the data but not do anything further.
Is your app buyer legit?
Whatever exit route you choose, it is important to make sure you are dealing with a serious, reliable buyer when you want to sell your app. If you have a good app, you may even be contacted by interested app buyers directly. It is worth taking a bit of time to do your homework on the buyer, considering things like:
- App market track record: Is there evidence that the company has made one or more app acquisitions before?
– How big were those acquisitions?
- Does the company (or individual) proposing the purchase seem reliable in their online presence and background?
– Are they open about their identity and about who is behind the organization?
- Does the process they propose seem solid and trustworthy – in particular the type of payment process they are suggesting?
– The safest and most commonly used method is Escrow.
Making sure you get paid
The safest and most frequently used way of managing payment for digital assets is through escrow. This means that the money for the purchase is put in a safe third-party account and gets released once the assets purchased have been received. While direct bank transfers may be cheaper, agreeing to use this as a payment tool can be far riskier, as there are no safeguards.
Escrow has advantages for both sides:
- Good for app sellers: Before the assets are transferred, there is proof that the money is available and will be released once the buyer gets the assets
- Good for app buyers: The money is not officially released to the seller until the assets are received
What different routes are open to you when you’re ready to sell your app? Who are the main players? In our next installment, we’ll take you through the channels on offer – different kinds of marketplaces, brokers or direct buyers – and explore the pros and cons of each.
Follow us on our social media to find out when the next part is out. If you’d like to discuss an app you’d like to sell with Appsbuyout, please get in touch to get an offer.