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MGF 2013: How to sell your company and what it's worth

#mgf2013 Agnitio Capital's Shum Singh reveals all
MGF 2013: How to sell your company and what it's worth
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What's the deal when it comes to mergers and acquisitions within the mobile games space? That was the subject for Shum Singh, MD of Agnitio Capital at Mobile Games Forum 2013.

Tackling the title 'What it takes to sell your mobile studio?', his key criterion was having a strong management team in place.

"This is so, so important," he argued. "It's tier 1. Everything else is tier 2."

As for those 'other things' start ups should be focused on, Singh listed a focus on original IP, analytics expertise, understanding of free-to-play mechanics, a background in triple-A development, as well as demonstrable revenue growth and profitability.

Of course, companies ticking all those boxes won't be lacking in suitors.

For start ups and indies who can't demonstrate all or (m)any of these attributes, he suggested investigating publishing deals with a larger, experienced partner as being a good way of building up profile, also pointing out this was the route by which CSR Racing developer Boss Alien was acquired by NaturalMotion.

On the value

As for what sort of money companies can expect to make when sold, Singh looked back through the acquisitions that had occurred in 2011 and 2012.

"In 2011, the main buyers were US companies such as EA and Zynga. EA bought PopCap for around 5 times revenue," he said.

During 2012, the geographical focus switched, however. Half of the buying companies were from Asia (i.e. GREE, Nexon, DeNA), while 43 percent of the companies they bought were also Asia.

For example, Nexon bought gloops for 1.5 times its annual sales, or 6.3 times EBIT (earnings before interest and taxes). Because it was a large, mature company, the multiples were lower.

As a rule of thumb, Singh reckoned that fast-growing companies displaying strong management etc could expect to be valued around 3.5 times their annual earnings.