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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 |