Annual Revenue: $860,724
Net Cash Flow: $434,252
Founded more than twenty years ago by a telecommunication and media veteran, the company provides a cloud-based software solution for media companies to effortlessly calculate complex video content royalties, eliminating error-prone manual methods. The software can be used for any type of royalty calculation and is not limited to video.
The company’s mission-critical software generates a client retention rate that exceeds 99%. Their high recurring revenue of 97% of the projected $861K revenue for 2023, showcases the stability of the business model with very predictable, consistent returns. The cash flow of the company as measured by its seller discretionary earnings (SDE) is estimated to be around $434k in 2023 (+15.7% increase year over year).
Notably, revenue sources remain diversified, with newer revenue streams such as Managed Services, Consulting, and Custom software accounting for more than 20% of revenue and no single client contributing more than 12% of revenue. A secure foundation is established through multi-year contracts with major clients, assuring a steady future income stream. An acquirer can capitalize on untapped potential in the expansive market, where hundreds of companies, both domestically and internationally, still rely on outdated tools. A lean and efficient operational structure, characterized by minimal overhead and a remote workforce, positions the company for high scalability and amplified profitability with each new client acquisition.
Team: Fully remote team, led by its CEO and founder, supported by a team of four employees working part-time and full-time.
Services and Clients: The comprehensive services offering which includes custom software development and software licensing, also features budgeting tools and consulting services. These generate steady recurring revenue. Newer revenue streams include Managed Services, as companies continue to look for opportunities to streamline their operations and outsource their administrative costs.
Most client contracts are secured on a multi-year basis ranging from three (3) years upward.
Reason For Sale:
The owner is planning for retirement and looking to sell the business to the right buyer as part of a succession plan for the company.
Training & Support:
The owner is willing to assist the prospective buyer for up to two years on a part-time basis. However, this is not a requirement and can be negotiated.
There are no comparable direct competitors in this market, the competition is represented more by individual companies using Excel or their homegrown products.
The company differentiates itself by offering innovative products, competitive pricing, rapid implementation, and customization based on clients’ requirements.
By directing strategic investments into robust sales and marketing initiatives, it can tap into a large market of both US and international companies that continue to rely on manual processes, unlocking significant growth potential by acquiring new clients.
Most clients now subscribe to its Managed Services consulting, and this presents a growth opportunity by cross-selling to new and existing clients.
The company continues to explore the development of new products and services which provides an additional growth area. Based on customer feedback this year, the company developed customized payment backup reports, as well as Accounts Payable/General Ledger Upload Reports to streamline their clients’ payment process.