Naijaloaded.com.ng is undoubtedly one of the biggest blogs in Nigeria. The owner, Azeez Makinde has not only built a name for himself with this blog, but has built the business and obviously made good money for himself as well whilst still making more money.
He broke news on his Facebook page yesterday August 17, 2016 that he got an offer of three million dollars ($3m) from an unnamed investor to buy up 70% stake of NaijaLoaded and he was asking for people’s opinion whether he should accept the offer or not. Many of those that offered their opinion were simply shouting “Yes, accept it. That’s about 1.2 billion naira“, “No, don’t accept it. It’s not a good deal” or “No, don’t accept it because you can make more or he should offer more“.
However, in my humble opinion I don’t think it’s about just looking at the face value of the $3m and saying YES or NO. To arrive at the right answer to give to the guy, Azeez Makinde should first of all ask himself these questions
- Am I willing and ready to give up part of the ownership?
- If the answer to question 1 is YES, then what percentage are my willing to give up?
- What is the current valuation of the business? If this is not known, then the help of a professional in this field is needed to value the business.
- With respect to the current plans that I have for growing this business, what will the value be in the next one, two or five years?
If the guy is offering $3m for 70% equity, then simple maths shows that he values the business at $4.2m+. So, if the real valuation of the business is less than $4.2m, then the guy’s offer is fair and good for you. However, if the actual valuation is more than $4.2m+, then the guy needs to up his offer.