Technology Solutions & Lifecycle Management – 450+ Clients
With $240k in recurring monthly revenue – average sale size is $1.7M!
With $240k in recurring monthly revenue and an average sale size of nearly $1.7M, this IT management company has been established in the Twin Cities area for nearly 30 years! Serving clients locally (75%), regionally (10%), and nationwide (15%), this business offers a variety of technology services & products. Services include technology lifecycle management, IT staffing, cloud solutions, data storage, data security & remote access, and web services; they also provide new & re-certified equipment from leading manufacturers, as well as sales, repair, maintenance, and installation of windows desktops and servers. A highly-skilled team of 39 employees consists of 6 in Operations, 4 in Admin, 10 in sales, and 19 in the service department. They cater to each customer’s specific needs for their company and implement customized IT solutions and services. Clients are in a variety of industries such as education, financial, healthcare, insurance, and manufacturing; of their 450+ clients, 288 of them purchase $1k or more per year, 122 of them purchase $10k or more, and 24 purchase $100k or more annually. 2021 is on track to be a record year for this business, as the remote workforce is now entrenched in the workplace – this business will see double digit growth for the foreseeable future.
Based out of an 18k sq. ft. building, 9,000 sq. ft. is used for warehouse/production space, while 4,500 sq. ft. is office space; the remainder is rented by tenants. Assets include $161k of equipment – PC’s, notebooks, servers, SAN’s, network gear, warehouse equipment, and office furniture & fixtures. The current owner handles HR, Finance, AP, AR, policies & procedures, and contracts, and is willing to stay on board for 1-5 years to help grow the company.
Priced at $4,150,000, this business already has a strong recurring client base, word-of-mouth referrals, and an extremely well-established name in the industry and the region. Marketing is the key to organizational growth; better SEO, email campaigns, lunch & learns, etc. would generate more client interest and boost revenue.
Year Established: 1992
Location: Twin Cities
Service Area: Local (75%), regional (10%), and national (15%)
Services: Managed IT services, lifecycle management, IT staffing, cloud solutions, data storage, data security & remote access, web services, assistive & adaptive technology, providing hardware & software, sales, repair, maintenance, & installation of windows desktops & servers
Clients: Companies in a variety of industries: Education, Financial, Healthcare, Insurance, & Manufacturing
Lease: 18k sq. ft. building; 9k is warehouse/production space, 4.5k is office space (7 offices, 2 meeting rooms); the remainder is rented by tenants – Rent is $12k/month
Reason for Selling: Looking to grow the company by leveraging areas out of the owner’s expertise
Personnel: 39 FT W2 employees; 4 Admin, 6 in Operations, 10 in Sales, 19 in Service
Seller Training Period: 1-5 years
Growth Opportunities: Generate more client interest through better SEO, email campaigns, lunch & learns, etc.
Current Owner’s Responsibilities: HR, Finance, AP, AR, policies & procedures, contracts
- List Price: $4,150,000
- 2-Year Average Cash Flow (2020-2021): $1,076,517
- Estimated Working Capital: $500k
Equipment: $161,000: PC’s ($40k) Notebooks ($18k), Servers ($45k), SAN ($18k), Warehouse Equipment ($15k), Furniture & Fixtures ($25k)
Software: ConnectWise, Kaseya, QuickBooks, Enterprise, VarStreet
Intangible Assets: Strong recurring client base, word-of-mouth referrals, well-established in the industry & region
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
|Net Income Shown on Financial Statement||$1,101,426||$179,478||$167,706||$112,726|
|Compensation to Owner||$102,816||$108,354||$108,304||$124,510||Owner|
|Other unrelated Salaries||$71,100||$116,282||$100,000||$100,000||Owner's Spouse|
|11% Tax on total W2 Salaries||$19,131||$24,710||$22,913||$24,696|
|Meals & Entertainment||$5,308||$13,281||$14,154||$10,558|
|Owner's Insurance||$13,333||$20,000||$20,000||$20,000||$10k/year - Health, $10k/year - Life|
|Owner's Travel||$2,666||$4,000||$4,000||$4,000||$4k/year - personal|
|Pension/Profit Sharing||$0||$0||$29,897||$0||Line Item 17 - To Owners|
|Owner's Pest Control||$0||$1,000||$1,000||$1,000|
|Owner's Personal Supplies||$0||$3,352||$945||$1,177|
|Owner's Professional Fees||$49,970||$127,000||$22,845||$2,100|
|Owner's Repair & Maintenance||$25,363||$23,920||$23,790||$14,100|
|COGS Write-off||$0||$125,000||$0||$0||One-time expense|
|Seller's Cash Flow = Total Addbacks + Net Income||$1,344,991||$808,042||$565,749||$416,161|
|Profit Margin||12.15 %||6.18 %||4.12 %||4.55 %|
- Covid resulted in a small dip in 2020, less than 5%. 2021 is on track to be a record year.
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