Managed Services with 48k in Recurring Monthly Revenue
- Year Established: 2010
- Location: Council Bluffs, IA
- Service Area: Omaha and Council Bluffs, with some satellite services
- Services: IT support
- Building: 2,200 sq. ft.: office (1), conference room, open office area with 6 workstations, workbench, attached garage, break room
- Reason for Selling: Family Illness: The owner of this company has a child who needs significant medical support and intervention and he is looking to step away from an ownership position to be able to focus on the needs of his family at this time.
- Employees: Service Desk Manager (1), Lead Tech (1), Techs (3)
- Seller Training Period: 90 days transition
- Growth Opportunities: Advertise, lunch-and-learns, grow the team to increase capacity, increase hardware support services
- Current Owner’s Responsibilities: Office management and business development
- List Price: $980,000
- Gross Sales:
- 2017: $808,272
- 2016: $783,679
- 2015: $701,169
- 2014: $525,873
- Cash Flow:
- 2017: $213,517
- 2016: $135,398
- 2015: $135,309
- 2014: $128,224
- Assets Included in Purchase*
- Equipment: $4,806: Server, computer systems
- Inventory: $36,461
- A/R: $31,733
- Secured Monthly Revenue: $48,467
- Intangible Assets: Excellent word-of-mouth referrals, long-term contracts, clients in varied industries
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$117,344||$56,368||$67,731||$65,495|
|Compensation to Owner||$53,770||$42,079||$45,080||$53,580|
|11% Tax on total W2 Salaries||$5,915||$4,629||$4,959||$5,894|
|Meals & Entertainment||$2,201||$630||$632||$413|
|Insurance Premiums for Owners: Health||$10,784||$4,187||$1,827||$1,209|
|Personal Auto Expense||$2,920||$3,883||$5,096||$0|
|Owner's Retirement Plan||$2,441||$0||$0||$1,517|
|Moving Expense||$0||$0||$3,576||$0||One time cost|
|Building Expense||$0||$17,907||$0||$0||One time cost for building items and enhancements|
|Seller's Cash Flow = Total Addbacks + Net Income||$213,517||$135,398||$135,309||$128,224|
|Profit Margin||26.48 %||17.28 %||19.30 %||24.38 %|
- 53% growth from 2014-2017!
- Clients with minimum 10 workstations and 1 server ($500 monthly minimum)
- Law firms
- Health care providers
- Small / Medium Businesses
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Managed Services
- Unlimited break/fix support
- Continuous monitoring
- System administration
- Desktop support
- Data Back-up and Recovery
- Cloud support
- Back-up and disaster recovery
- Network Security
- IT consulting and strategy
- New hardware deployment
- Complete IT support
- Service Desk Manager (1)
- Lead Tech (1)
- Techs (3)
- Lunch-and-learns to make connections in the community
- Grow the team to increase capacity
- Increase hardware support services
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2017 Cash Flow was used with a prescribed multiple is 4.6. With this information, the computation is as follows:
$213,517 x 4.6 = $982,178
The Fair Market Value found above positions the business List Price at $980,000.
Purchase Price: $980,000
15% Buyer Down Payment: $147,000
15% Seller Financing: $147,000
70% Bank Loan: $686,000
Seller Financing 6-year term at a rate of 4% equals a monthly loan payment of $2,300.
Bank Loan 8-year term at a rate of 5.75% equals a monthly loan payment of $8,932.
After business expenses and loan payments, a buyer with a 15% down payment of $147,000 would retain a profit of $78,738, which results in a 54% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $980,000 with the terms listed above, the coverage ratio is 1.58.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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