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The company is a well-established business consisting of eleven full-time staff and three long term off-shore contractors. They have had an impressive profitability track record since their inception. With its main office located in Northeastern U.S., the company has been delivering exemplary licensing software services to a nearby Northeast state for many years and is uniquely qualified to continue delivering these services and more.
In business since 2001, the company provides software design development and support services to state agencies that protect the health, safety and welfare of the public by regulating professions, activities, sites, and other entities through compliance and education. Their reach into more agencies within its service state has steadily grown, as regulatory agencies with unfulfilled needs have elected to move to the the company's Agency License Management System (ALMS). The services provided involve more than software development and maintenance. Their experience working with the state and expertise in licensing methodology provides their serviced state with a more valuable product than the typical software development vendor. Agencies currently using ALMS have a high level of satisfaction. New agencies often hire the company primarily as a result of their reputation and word-of-mouth referrals from other agencies.
Due to the niche nature of the business, the company does not compete directly with any “top competitors.” Given the long-term contract with its service state, with an annual value of $2 million (plus unused funds carried from prior years), revenue from the serviced state represents 100% of the company’s total revenue (100% recurring revenue).
While achieving impressive financial results over the past years, the company still has significant opportunity to grow by targeting other agencies within its current serviced state that are displeased with their current licensing system. Becoming part of a larger company would allow for more dramatic growth by positioning the company to broaden Its service offerings within the currently serviced state as well as being able to to expand into other states.
With over $2.3 million in total income, $487K in seller’s discretionary cash flow, an average EBITDA margin of 20%, the company is listed at $1.3MM with negotiable terms.
- Established company of 17 years with impressive track record
- Consistently profitable over the years of operation
- Niche leadership position in the licensing space
- Long-standing, strong relationships with service state and its agencies
- Healthy margins with an average EBITDA of ~ 20% of revenue
- Immense unlocked growth potential with unexploited opportunities within - and outside of service state
- Long-term exclusive customer relationship in place with a yearly value of $2MM
- Highly skilled staff with expertise in licensing and strong software development skills
- Exceptional customer support
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§ The business site is leased.
§ 2,139 Sqft.
§ Rent Expense: $45,989/ year, or $21.50 per square foot.
The Software Publishing industry is a $250 billion market. Over the past five years to 2018, industry revenue is estimated to have risen at an annualized rate of 5% (including a 3.8% increase in 2018). In the same time frame, the number of businesses has grown by 6.3% and the number of employees has grown by 7.1%. State and local government IT spending has also consistently increased over the past 4 years. In 2018, state & local annual IT spending totalled $103 billion compared to $97 billion in 2015, implying an increase 6.2%. Strengthening corporate profit stimulated demand from businesses, while rising disposable incomes encouraged consumers to spend more on software. The rise of web-based solutions and the increasing popularity of mobile devices have triggered an explosion of mobile software applications.
Due to the niche nature of the business, the company does not seem to have any clear direct “top competitors.”
Owners planning for retirement and interested in creating a succession plan
The current owners will want to provide the new owners with the initial training and subsequent transition support they will need to properly serve their serviced state and continue growing the business. The amount of training and support needed will be a factor of the new owner’s background as well as their decisions regarding which current employees are retained.
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