Tactics for buying and selling apps

Couldn't outrank an app for a keyword wanted for a client, downloaded it and saw it was undermonetized: #1 for two keywords with ~28 and ~34 search volume, 100-150 downloads/day, one-time $2-3 price, no onboarding paywall. Benchmarked price on a similar client app doing ~$1M ARR at $60/year. Bought it (2022), added onboarding and a paywall (mid-May), went fully hard paywall with a trial at $60/year in June. No new features and no extra downloads.

Rather than paying cash, take a loan for the purchase price. Illustration: an app making $10K/month profit bought for $350K on a 10-year loan with ~$5K/month payments leaves ~$5K/month profit; price is earned back in ~3 years with 7 more years of loan term. Only buy apps with organic distribution built in, so profit doesn't depend on continued ad spend. Used for Indie App Santa (2024) even though they had the cash.

Choose the buyer type that fits: aggregators/holdcos (traffic, recurring revenue, clean books, room to 10x), strategics (highest multiples via synergies), or private equity (predictable cash flow, strong EBITDA; founder stays 3-5 years). Read each target's last five deals to see why they bought, then build the metric narrative they want (e.g. for Strava: beginners onboarded and graduating to 5K). Start relationships 6-12 months before the sale. Ask buyers what moved the needle on past deals (ads, price tests, features) to know what they'd do with your app.

To find jobs for her team, reached out to a bunch of companies; 3 days later Hopper made an acqui-hire offer. Used it to get Expedia to offer to buy the whole company for a lot more, then brought in Lonely Planet, which offered more still. Went back to Hopper: 'we'd rather go with you, we're more excited about your vision, but you're going to have to pay double now.' Existing investors then also offered to recap the company and lead a new round.

To cut distractions and focus on the apps doing well, listed a small app on Flippa, where a buyer found it. Priced it realistically (expect 2-5x profit; 2-3x is fine) and gave the buyer a decent deal. Both sides were motivated, since time kills deals. Rule of thumb: Flippa for roughly $10-50K apps; for six or seven figures, use a broker (e.g. Evelyn Ferrara, AppBusinessBrokers.com). He also sold another app to ROUNDS.

Creator contracts grant perpetual rights to run the videos as ads (no 1-year licenses to renew) and freedom to edit and mix-and-match footage. Avoids creators demanding e.g. $100K when an ad takes off. At the sale, all creatives were handed to the buyer together with the signed contracts.

Used broker Charlie from Appflip. Negotiated without rush from strength (proven ad process, warmed-up Meta account, Meta rep, 300 rights-cleared creatives, strong conversion/profit as a business app). Hired a lawyer qualified in both Europe and the US; ~100-page contract; funds via an escrow in Singapore; broker connected them with another founder who had sold to the same buyer, who vouched on a call. Founder spent ~1.5-3 months mostly on legal.

When buying an app, pay 50% at closing and guarantee the remaining 50% after 12 months regardless of KPIs or app performance. Unlike an earnout (payment tied to e.g. keeping downloads at current levels), payout isn't tied to performance, which sellers see as fair, and the lower upfront risk lets the buyer offer a higher valuation. Alternatives discussed: all-cash, earnout, equity plus cash (e.g. 70/30), revenue share.

With under a month of revenue, estimated MRR from 26 days of revenue plus 20-30 pending 7-day trials at the current trial conversion rate (~$3K MRR), then priced at ~4.5-5x ARR. Terms: 30% equity retained, 6-month cash earn-out, separate cash bonus; the buyer's studio brings developers, a distribution team and capital. Diligence took a couple of days (App Store Connect access to check users weren't bought), then six contracts negotiated, funds via escrow, then asset transfer. He weighed it as de-risking, capital for the next app, and personal-brand leverage.

A year before selling he saw a bigger company buy a smaller game site like his. He contacted them with all his stats, got a $100,000 offer he considered a lowball, countered, agreed at $120,000, and used Escrow as the middleman to transfer the money. Sold right after the growth spike.

Tweeted about Praycreen (his audience knew he'd sold apps before; the app was easy to explain). Several buyers DMed. Sold to a buyer who had talked to him about BibleBuddy ~1.5-2 years earlier. His rule: since 90%+ of deals fall through, take even the third-highest price if that buyer can close in 4-5 days. Offer a 1-2 month transition/advising period to sweeten the deal. Show 3+ months of consistent revenue.

Screen each app or category on three lenses: (1) size: the product must plausibly reach tens of millions of dollars in revenue, avoiding a long tail of zombie apps doing a few hundred thousand each; (2) competition: a 'Goldilocks' market where you can take real share, e.g. RoboKiller was the leading independent spam blocker with carriers not invested and no big adjacent entrants; skip VPNs (everyone spends heavily on paid, so unit economics fail) and personal finance/budgeting (banks bid on the same keywords with far higher LTV); (3) existing demand vs. new category: existing demand allows ASO and performance marketing to pay back right away, while a new category means running at a loss to build demand.