Online Support and Hosting Company
The last few years have shown a dramatic increase in net revenue as the Seller has moved to a virtual office space which allows the incoming buyer to acquire and run this company from anywhere, worldwide. The client’s site is hosted on a shared server in Atlanta, while this could easily be moved to a new location or integrated with the Buyer’s existing hosting for other clients.
The profit margin for this company is an impressive 76% due to its service-based nature. The business also comes with hard-copy licenses for the Adobe and Microsoft Suites, and the incoming buyer will also inherit the company’s seven-character .com domain name.
A buyer with a down payment of $51,500 would recoup 91.24% of his or her initial investment in the first year of business, achieving a net operating income of $46,987.
- Years in Business: 35
- Location and Service Area: 100% Virtual
- Services: Website, technical documents, consulting
- Lease: No lease; virtual company
- Reason for Selling: Family Health
- Hours: As needed
- Seller Training Period: 90 days
- Growth Opportunities: Expand clientele – exclusive access to 100+ companies in client’s industry
- Current Owner’s Responsibilities: Owner/Operator
List Price $206,000
- 2018: $117,656 Annualized
- 2017: $98,367
- 2016: $88,544
- 2015: $80,191
- 2017: $74,751
- 2016: $49,501
- 2015: $47,980
Assets Included in Purchase*
- Equipment/Software: Adobe & Microsoft Suites
- Intangible Assets: 35-year reputation, ongoing exclusive contract with client (servers are leased), seven-character .com domain name.
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
January - August
|Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$0||$74,312||$48,693||$47,287|
|Meals & Entertainment||$0||$432||$798||$678|
|Seller's Cash Flow = Total Addbacks + Net Income||$0||$74,751||$49,501||$47,980|
|Profit Margin||0.00 %||75.99 %||55.90 %||59.82 %|
- 2017 profit margin: 76%!
Typical Clients and Services
- One large client – B2B Company with access to over 100+ other businesses
- Website Development
- Technical Documents
- Standard Consulting
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- All work is currently performed by the Seller, but could easily be outsourced to the buyer’s choice of subcontractor
- Expand Clientele
- Work with existing client to provide services to 100+ businesses in their portfolio
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 2.75. With this information, the computation is as follows:
$74,751 x 2.75 = $205,565
The fair market value found above positions the business list price at $206,000.
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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