Business for Sale, Would I Buy It? | IT Company

Alright so in this edition of Would I Buy This, we’re looking at a profitable Dallas area IT company. So let’s see what is going on. It says the asking price is 3.5 million, and the cash flow is [651,748]. Okay so right off the bat they want almost six times the cash flow is their asking price. That’s a lot, that is a lot of money for a typical business of this size. So right there I would say this is you know, if I was interested in IT businesses I might still look at it but I know I’m gonna have a job of convincing the seller to come down on their price. Cause I think that is just a lot more than this kind of business is gonna warrant. It does say sale pending but of course, it doesn’t say sale pending at what price. So who knows what the pending sale is gonna go through or what the offer was? So gross revenue is [2,609,109], so there at about a 20% profit margin, which is okay but not amazing. $400,000 of fixtures and equipment which is okay again, but that doesn’t help the price be justified by that amount of equipment. Let’s see what else it says. 21-year-old family-owned and operated North Texas IT Integrator Service. Specializes in integrating voice and data cabling systems, fiber optic cabling, and paging audio-visual cabling. Yeah I don’t, I don’t see anything special enough about this business to warrant such a high price. So right off the bat, I guess I would be less interested in this than other comparable ones I know. IT businesses do for whatever reason tend to sell for a little more than the average business but even four times which would be high would be 2.5 million, so 3.5 million is an extra million for I’m not sure what. So I would probably not consider this one just because there’s nothing else amazing about it. If they’re doing cabling you know, you gotta be local on the ground for that. If it was an IT business that was virtual and you could service IT customers across the country that might be more interesting just because you got a much huger market to serve. But if you’re on the ground, dragging cable through walls, and through drop ceilings, and stuff, and setting that up, I’m not as excited about it cause I gotta be local. I’m not excited about it cause it’s not a particularly high profit margin. And I’m definitely not excited about it because of the super high price. So for those reasons, I think I would pass on this one and look for something more reasonable.

Here’s a little about this series. CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses for sale and see if Matt would be interested in buying them.