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Deal Analysis Table

Category

Details

Industry

IT Services and Consulting

Location

Hartford, CT

Established

2009

Annual Revenue

$2.5 million

Annual EBITDA

$600,000

Number of Employees

20 full-time

Client Contracts

Long-term contracts with 15 major clients

Services Offered

Managed IT services, cloud solutions, cybersecurity, IT consulting

Growth Opportunities

Expansion into new markets, addition of new services, increased marketing efforts

Asking Price

$3.5 million

Gross Revenue

$2.5 million

Cash Flow

$600,000

Inventory

$50,000

FF&E

$200,000

Real Estate

Leased (5-year renewable lease)

Reason for Selling

Owner retiring

Support & Training

Up to 6 months

Market Position

Competitive local market position, diverse client base, high-quality service, and reliability

Exit Ready Score Card

Category

Score (out of 10)

Comments

Financial Performance

8

Strong and stable financial performance, healthy EBITDA margin.

Client Contracts

9

Long-term contracts with major clients provide revenue stability.

Market Position

8

Well-known and respected in the local market, competitive position.

Growth Opportunities

7

Opportunities for expansion, but would require investment in marketing and services.

Dependence on Key Clients

9

Low client concentration risk due to a diverse client base.

Operational Efficiency

8

Effective operations with established processes and a skilled workforce.

Management Team

8

Experienced management team and owner willing to aid in transition.

Industry Trends

8

Industry trends are favorable, with increasing demand for IT services.

Valuation

7

Asking price is reasonable but should be carefully evaluated in the context of future growth.

Deal Structure

7

Leased real estate and manageable asset values make for a flexible deal structure.

Total Score: 79/100

In-Depth Financial Analysis Table

Component

Details

Considerations

Revenue Consistency

Historical revenue trends over the past 5 years

Ensure stable or growing revenue without significant fluctuations

Profit Margins

Gross and net profit margins

Compare with industry benchmarks to assess profitability

EBITDA Margins

24% EBITDA margin ($600,000 EBITDA on $2.5 million revenue)

Healthy margin, but should be benchmarked against industry standards

Contract Terms

Long-term contracts with renewal clauses

Favorable terms that provide revenue stability

Client Diversification

Revenue distribution across clients

No single client should represent more than 10-15% of total revenue

Competitive Landscape

Market share, competitive advantages, threats

Understand positioning relative to competitors

Brand Strength

Reputation and recognition

Strong brand equity enhances customer loyalty and pricing power

Market Expansion

New markets or geographic regions

Costs and resources required to enter new markets

Service Diversification

Introducing new IT services

Potential to attract more clients and increase revenue

Revenue Concentration

Percentage of revenue from top clients

Diversified client base reduces revenue risk

Client Relationships

Length and strength of client relationships

Long-standing, satisfied clients are a positive indicator

Cost Structure

Fixed and variable costs

Identify areas for potential cost reduction

Technology and Infrastructure

Current state of technology and infrastructure

Up-to-date and capable of supporting future growth

Team Expertise

Skills and experience of management team

Strong team with relevant expertise

Transition Plan

Owner's willingness to support transition

Smooth transition with owner's support

Market Demand

Industry trends driving demand for IT services

Confirm growing demand for services

Regulatory Environment

Regulatory changes impacting business

Stay informed about potential regulatory impacts

Comparable Sales

Recent sales of similar businesses

Ensure asking price aligns with industry valuation multiples

DCF Analysis

Present value of future cash flows

Estimate future cash flows with appropriate growth and discount rates

Asset vs. Stock Sale

Structure of the sale (asset or stock)

Different tax implications and liabilities

Lease Terms

Terms of leased real estate

Favorable lease terms providing stability for new owner