What a Buyer Checks First
- Monthly recurring revenue and the share of total sales it makes up
- Contract length, renewal terms and client churn by year
- Gross margin on managed services versus project work
- Technician depth, certifications and who knows each client
- Security tools, backups and how client data is protected
Recurring Revenue Leads
Buyers pay the most for monthly contracts that renew on their own. They separate recurring fees from one time project work and look at how long clients stay. A provider with low churn and long agreements sits at the top of the range.
Margins and Pricing
Gross margin tells a buyer whether the pricing is right. They look at tool costs, licensing and technician time per client. Underpriced legacy contracts are a common drag, and they ask when each client last saw a price increase.
People Hold the Knowledge
If the owner is the best technician and the main contact for big accounts, the company depends on one person. Buyers ask for documentation, a ticketing history and a second person who knows every client. Certifications help show depth.
Security and Liability
Clients trust the firm with their data. Buyers check security practices, backup tests and insurance for cyber claims. A past breach or a weak setup lowers the price, while documented procedures raise confidence.
Client Concentration
When a few clients account for a large share of revenue, buyers get nervous. A rough rule many use is that a top customer above fifteen to twenty percent of sales invites a discount or a longer earnout.
Getting Ready
A buyer will also ask which clients are on old equipment or unsupported software, since those become costs after the sale.
List every client with the contract start date, monthly fee and tools used. Write down passwords and procedures in a secure system. Buyers pay for a company that works without its owner on call.
Read about seller financing terms and asset or stock sale, then ask for a confidential estimate.
