Marketing Software and Web Developer with Clients Nationwide

Transcription

1 Marketing Software and Web Developer with Clients Nationwide This web-development, marketing, and software company, founded in 2000, has developed a loyal, long-term client base, who appreciates its excellent service, industry expertise, and set of proprietary marketing software products. From 2009 through 2013 the business average annual sales growth rate has been over 17%, and its margins are more than 50% higher than the industry. The margins have been achieved through efficiency, software, and other ways of containing costs, not high prices. This company s product and service pricing is very competitive and there may be an opportunity for price increases without adversely impacting marketability. The business has managed its growth by not taking on all of the business that it could, and primarily targeting clients in a specific industry and of a certain size. Listing Number Type of Business Location Year Founded FT Employees* PT Employees* Why Selling Price Seller Financing Internet Marketing Software and Web West Coast Seller wants to pursue another venture $3,600,000 No Revenue Gross Profit Seller Disc Earnings 2013 $2,089,851 $1,944,688 $692,928 An ideal acquisition for a complementary software/web developer or marketing firm

2 Benefits of This Business Excellent pool of stable, coveted clients This business serves clients throughout the United States, many of whom are some of the largest and most respected in their industry. The business has high retention rates with these stable clients, which is partly attributable to excellent service and partly due to the quality of proprietary software products offered. A buyer can use this reputation of quality service to continue to attract new clients. Established, under-exploited intellectual property The company offers a set of internet marketing software products, including solutions for website content management, marketing, and automated marketing. Excellent profit margins By being able to command good prices while keeping costs low, not only has the company been highly profitable, but is also poised to withstand future competitive threats. The ability to lower pricing and still maintain good margins, should it ever need to, will help it remain a dominant player even if there are new market entrants. margins are more than 50% higher than the industry. There is strong demand for this company s services Existing clients have been strong fans and supporters of the business due to the quality, effectiveness, efficiency, and service. This has led to high demand, to the point where there are more prospective clients than the business can accommodate. Solid sales growth From 2009 through 2013, the average annual sales growth rate has been over 17%. When you consider that there are a variety of un-exploited opportunities for growth, there is reason to believe that double digit growth rates are possible for several years. Very little active marketing or advertising has been necessary to attract business Almost all business has been generated by referral. Strongly differentiated from competitors This company maintains a focus on solutions for a single industry vertical (most competitors target multiple industries). We are only aware of two other vendors in the country that offer software solutions in the same class. Only one other vendor offers a similar, full set of solutions.

3 Opportunities Simply staff up to accommodate business that is currently being turned away This business has not been able to accommodate all of the work that was available to it. A larger organization, or an acquirer who can staff up the company, could increase revenue by simply accepting more prospective client work. This business has chosen to limit its growth to a more easily manageable level. Serve%smaller%companies%in%the%same%industry%vertical A decision was made to only service larger organizations. While this has served the business well, there are a limited number of large organizations in the industry vertical, and this company s intellectual property could be used to create a product offering for the tens of thousands of other, smaller organizations in the same industry. Pursue%other%similar%industries This business has focused solely on marketing to a specific industry vertical, yet its expertise and IP could easily be adapted and add significant value to other clients in related industry verticals. Pursuing another vertical market could lead to a new source of dramatic growth, and would be a logical extension of this business work. Adapt%this%company s%proprietary%ip%products%to%a%software%as%service%(sas)%model There may be some creative ways to approach licensing that would increase revenue and profitability. Offer%more%frequent%software%version%releases The company s upgrade release cycle is longer than is typical. More frequent releases of new software versions would increase revenue through from licensing fees.

4 Financial Year Sales $1,376,914 $1,474,509 $1,839,252 $2,089,851 Cost of Goods Sold ($135,778) ($94,318) ($118,394) ($145,163) Gross Profit $1,241,136 $1,380,191 $1,720,858 $1,944,688 Depreciation Amortization Sales General & Admin Net Operating Profit ($4,540) ($2,408) ($986,496) $247,692 ($3,707) ($2,408) ($1,042,282) $331,794 ($7,788) ($2,408) ($1,180,528) $530,134 ($1,315,850) Interest Expense Interest Income Other Financial Income $440 ($100) $357 ($70) $229 $238 $2,500 Profit After Financial Items $248,132 $332,051 $530,293 $631,576 Exceptional Expense ($50) Profit Before Tax $248,132 $332,051 $530,243 $631,576 Tax ($5,235) ($8,136) ($13,398) Net Profit After Tax (NPAT) $242,897 $323,915 $516,845 $631,576 $254,640 $337,909 $540,330 Capital Expenditures Estimated Fed & State Tax ($5,235) ($8,136) ($13,398) Operating Free Cash Flow $249,405 $329,773 $526,932 Market Rate of Owner Salary Seller Discretion. Earnings $254,640 $82,035 $336,675 $337,909 $76,908 $414,817 $540,330 $64,090 $604,420 $64,090 $692,928 Any financial or operating information relating to the company was prepared by, or from figures, documentation and information supplied by the Seller. Codiligent LLC, its principals, and employees can not guarantee the accuracy, completeness, quality, or reliability of information, financial data, or assumptions provided. A buyer should not rely on Codiligent LLC, its principals, or employees for any investigation, interpretation, or opinion as to the accuracy, completeness, quality, or reliability of said information. A buyer should conduct its own independent investigation and evaluation of this business opportunity, ascertain the accuracy, quality, reliability, and completeness of information provided, and assumptions used, and develop and rely on independently developed projections. Codiligent LLC, its principals, and employees shall neither be responsible for the accuracy, completeness,quality, or reliability of information, financial data, assumptions used, or projections provided, nor shall it be responsible for Buyer relying on said information and data.

5 Discounted Cash Flow Value Capital Expenditures Estimated Fed & State Tax Operating Free Cash Flow $683,649 $786,196 $916,374 $1,017,175 $1,108,721 ($268,580) ($295,845) ($355,236) ($401,621) ($444,459) $415,069 $490,351 $561,138 $615,554 $664,262 Year of Horizon Value Operating Free Cash Flow in Year of Horizon Value WACC 2018 $664, % Growth Rate to Use for Horizon Value Calculation 4.00% Discount Rate WACC 16.39% Horizon Value at end of 2018 Present Value of Horizon Value Present Value of Operating Free Cash Flows Present Value of Operations $5,574,116 $2,609,341 $1,720,764 $4,330,105 Deal Structure Adjustments (as of 3/31/14) Cash & Deposits will be retained by Seller Marketable Securities will be retained by Seller Inventory is N/A Accounts Receivables will be retained by Seller FF&E will transfer to Buyer Real Property is N/A PrePaid Expenses will be Seller's property Current Liabilities are Seller's Obligation Total Deal Structure Adjustments ($485,859) $12,542 ($167,376) $2,755 Present Value of Operations Adjusted for Anticipated Deal Structure ($637,938) $3,692,167

6 Market Comparable Value Multiple Value Estimate Value Adjusted For Deal Structure* Weighting Weighted Value Revenue $2,089, $3,260,168 $3,260,168 2% $65,203 Gross Profit $1,944, $3,169,841 $3,169,841 3% $95,095 SDE $692, $1,960,986 $37,258,739 15% $294, $3,842,200 $3,842,200 80% $3,073,760 Total weighed value $3,528,207 * Deal Structure Adjustments (as of 3/31/14) Cash & Deposits will be retained by Seller Marketable Securities will be retained by Seller Inventory is N/A Accounts Receivables will be retained by Seller FF&E will transfer to Buyer Real Property is N/A PrePaid Expenses will be Seller's property Current Liabilities are Seller's Obligation Total Deal Structure Adjustments

7 BUYER REGISTRATION FOR CODILIGENT LISTING # Thank you for inquiring about Codiligent listing # Confidentiality in this transaction is of utmost importance. A more comprehensive package of confidential information is available to qualified buyers who complete and submit the following forms to Codiligent LLC. You are welcome to submit an alternate certified personal financial statement in place of using the provided form. Please submit these forms by e@codiligent.com or Fax: Name: Phone: Mobile Phone: Company: Address: City, State, Zip: Website: Are you an owner, director, shareholder, manager, employee, advisor, or consultant to any other businesses in this business industry? YES or NO (please circle one) If you answered Yes to the last question, name the business(es) and describe your affiliation: Please describe your career background in 2-3 sentences: What s the source of your down payment: What is the minimum average annual return on equity that you require? % What are your top acquisition criteria? What is most appealing about this business based on information you have already reviewed? What concerns do you have about this business based on the information you have thus far? What businesses / industries or geographic locations are of interest for an acquisition? Businesses / Industries: Geographic Locations: FAX:

8 CONFIDENTIALITY AGREEMENT FOR CODILIGENT LISTING THIS IS NOT AN AGENCY AGREEMENT Neither this agreement nor any other communications between Codiligent LLC and you will establish a Principal-Agent Relationship, unless explicitly stated in writing. Codiligent LLC represents the Seller. Nothing in this agreement shall be construed to create a Principal-Agent Relationship between you and Codiligent LLC. You agree and acknowledge that you will engage professional advisors as you deem necessary and appropriate in connection with a potential acquisition, and that Codiligent LLC is only providing you with certain information. You agree and confirm that you have neither engaged Codiligent LLC to provide any advice to you about an acquisition, nor will you rely on information provided by Codiligent LLC in making a purchase decision. Codiligent LLC makes no representation or warranty, express or implied, as to the truth, accuracy, or completeness of any information provided to Codiligent LLC by the Seller. You further agree that you have not established a Principal-Agent relationship with Codiligent LLC. CONFIDENTIALITY This Agreement is made between the undersigned individually, and any business entity in which the individual is employed by, an officer of, or has a financial interest in, as well as any such entity s officers, directors, employees, agents and advisors ("The Buyer ) and Codiligent LLC for the benefit of Codiligent LLC and the owner ( The Seller ) of the number-designated business listed above ( The Business ) of which information is being requested. In consideration of the disclosure of confidential information regarding The Business by Codiligent LLC to Buyer, it is understood and agreed that: 1. Confidential Information is defined as: all information received by The Buyer from Codiligent LLC or The Seller now and in the course of future investigations or due diligence, which is not available to the general public. This confidential information includes all oral, written, or electronic data inclusive of, but not limited to, records, reports, analyses, photos, plans, financial statements, policies, procedures, ideas, customers, samples, notes, and studies. Anything prepared by Codiligent LLC, The Seller, or another party pertaining to The Business is to be considered Confidential Information unless explicitly stated in writing otherwise by Codiligent LLC or The Seller. If there is any reasonable doubt whether anything is, or may be Confidential Information, it is. 2. The Buyer will not disclose any Confidential Information or make known by confirmation, that this company, division, or product line is for sale or that financing is being sought, either before or after termination of investigations or negotiations to any person or organization not authorized in this agreement. 3. Without specific prior written approval of Codiligent LLC or The Seller, The Buyer shall not provide any Confidential Information to any broker, intermediary, lending institution, prospective equity partner, syndication member, investor, or other financing source. If disclosure to such parties is desired, Codiligent LLC may require the execution of a separate confidentiality agreement with those parties. 4. The Buyer will not contact the The Seller s employees, customers, suppliers, competitors, accountants, bankers, or attorneys to discuss The Business or seek information about it, without written permission from Codiligent LLC or The Seller. 5. The Buyer will not contact The Seller directly unless authorized by Codiligent LLC. 6. All Confidential Information provided by Codiligent LLC or The Seller to The Buyer shall be used solely for the evaluation of a potential acquisition or financing decision, and shall not be used for any other purpose. 7. All Confidential Information shall be promptly returned or destroyed, as directed by Codiligent LLC or The Seller. 8. The Buyer shall not enter into any agreement for the purchase of stock or assets of any companies about which Codiligent LLC furnished information to The Buyer, unless said agreement contains an acknowledgement that Codiligent LLC is the procuring cause of such agreement and Codiligent LLC is entitled to a commission as agreed upon by such company and Codiligent LLC. Dated at am/pm this day of 20. Name (printed): Phone: Address: Signature: FAX:

9 CERTIFIED STATEMENT OF PERSONAL WORTH AND INCOME Name (printed): Date: Address: Phone: I certify that the following information is true & accurate (please sign) ASSETS Cash on Hand US Government Securities Other Stocks & Bonds IRAs & Tax Deferred Retirement Accounts Accounts, Loans & Notes Receivables Cash Surrender Value of Life Insurance Real Estate Equity in Business Owned Automobiles Plane, Boat, RV, Motorcycle Household Furnishings and Personal Effects Other Assets AMOUNT IN US$ TOTAL ASSETS LIABILITIES & NET WORTH Credit Card Debt Line of Credit Balance Notes Payable Auto Loans Liens on Real Estate Plane, Boat, RV, Motorcycle Loan Other Liabilities AMOUNT IN US$ TOTAL LIABILITIES TOTAL NET WORTH (ASSETS - LIABILITIES) SOURCE OF INCOME Salary Bonus & Commissions Dividends & Interest Income Business Income Real Estate Income, Royalties Other Income AMOUNT IN US$ TOTAL INCOME FAX: