Opportunities
61% Profit Margin at Salt Lake City Area IT Services Company
Works with local and national companies of all sizes!
Specifications
This Salt Lake City area IT services company boasts a massive 61% profit margin! Along with providing network infrastructure services, this company also provides the necessary equipment and software their clients need: servers, storage, workstations, security software, virtualization software, etc. Services include firewall implementation & management, endpoint security, ransomware protection, data protection, disaster recovery, business continuity, instant virtualization, and proactive endpoint monitoring and management. The company utilizes specialized software, such as Datto RMM, Datto, BCDR, Autotask PSA, Auvik, Lionguard Scale Computing, DataCore, Windows, Citrix Apps, Citrix Hypervisor, Citrix ADC, and Sophos Central Endpoint. The company boasts high profit margins and has seen year-over-year growth in sales since 2018. In 2020, sales of goods and SaaS accounted for 41% of business while human labor services accounted for 59%.
The owner handles the day-to-day operations, while the two part-time 1099 employees assist with technology health checks, running weekly & monthly reports for clients, adding content to the website, and helping with quotes. The business is run from a home office or on site at client locations; no commercial office space is needed.
Priced at $920,000, a 10% down payment of $92,000 returns $145,681 in the first year after debt payments – a 158% return on investment! With a solid customer base intact and an abundance of documentation on each client, a transition would be seamless for an already existing IT management company that is looking to grow the own client list and revenue.
Business Highlights
Year Established: 2015
Location: Salt Lake County, Utah
Service Area: Local (85%), regional (5%), and national (10%)
Services: Provide network infrastructure services and equipment sales (servers, storage, workstations, security software, virtualization software)
Clients: Businesses & corporations seeking IT assistance
Lease: Business is run from owner’s home office; no commercial space needed
Reason for Selling: Pursuing other business interests
Personnel: 1 FT (Owner) + 2 part-time 1099
Seller Training Period: 6-12 months
Intangible Assets: Long-standing relationships with client & vendors, solid reputation for customer service
Growth Opportunities: Increase client base; excellent opportunity for existing IT Management company
Current Owners’ Responsibilities: Day-to-day operations of the business: various projects, meetings with clients, etc.
Financial Highlights
- List Price: $920,000
- 2021 Cash Flow: $330,193
- 2020 Cash Flow: $215,088
- 2019 Cash Flow: $126,484
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return Cash | Tax Return Cash | Tax Return Cash | Notes |
| 2021 | 2020 | 2019 | 2018 | ||
| GROSS SALES | $540,605 | $482,973 | $296,913 | $186,222 | |
| Net Income Shown on Financial Statement | $282,930 | $171,418 | $104,287 | $114,154 | |
| ADDBACKS | |||||
| Interest | $0 | $11 | $0 | $0 | |
| Depreciation | $0 | $30,976 | $0 | $0 | |
| Meals | $1,714 | $1,467 | $408 | $319 | |
| Charity | $200 | $0 | $0 | $0 | |
| Life Insurance | $6,757 | $0 | $0 | $0 | |
| Health Insurance | $8,850 | $0 | $0 | $0 | |
| Auto Insurance | $1,098 | $0 | $0 | $0 | |
| Auto Expense | $3,705 | $6,386 | $12,586 | $11,088 | |
| Medical Expense | $8,476 | $0 | $0 | $0 | |
| Travel | $16,463 | $4,830 | $9,203 | $8,601 | |
| TOTAL ADDBACKS | $47,263 | $43,670 | $22,197 | $20,008 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $330,193 | $215,088 | $126,484 | $134,162 | |
| Profit Margin | 61.08 % | 44.53 % | 42.60 % | 72.04 % |
Valuation
Funding Example
Funding Details
Business:
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: $
Loan Payments
| Monthly Payment to Bank: | $ |
| Yearly Payment to Bank: | $ |
| Monthly Payment to Seller: | $ |
| Yearly Payment to Seller: | $ |
| Total Monthly Debt Service: | $ |
| Total Yearly Debt Service: | $ |
Conclusions
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
|
Cash Flow: 2020-2021 Average Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2020-2021 Average Cash Flow |
$ |
| Annual Debt Service: | -$ |
| NOI: |
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
| Down Payment: | $ |
| NOI: | |
| ROI: | % |
Attachments
| Document Title / Description |
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210 N 78th St. 2nd FloorOmaha, NE 68114
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