We are pleased to offer for sale, this well-established N Texas IT Business Services Company, which is a provider of software imaging & burn in, and hardware integration, hardware support: repair & maintenance. This well-established, 19-year-old business is responsible for managing over 400,000 devices (terminals, scanners, phones, computers, tablets, etc.) in over 7,000 customer locations all around the globe for its department store, specialty retailer, and major restaurant brands. It was established by its husband-and-wife founders in 2003 and is currently a 100% certified woman-owned business. Through their offerings of point of sale (POS) equipment and software, mobility, network engineering, and digital display, this company has established itself as the “go to solution” for its global customer base. This company also fetches over $1.25M per year in maintenance contracts.
Their largest customer is a big box retailer who has been a loyal customer for 19 years now, and have rewarded this company with a sole source IT distinction which has resulted in a significant customer concentration of approximately 45% for YTD 2022. The husband has committed to remaining onboard after closing, indefinitely, to help facilitate a smooth transition of the customers, employees, processes and suppliers to the successful new owner. Over the past four years, this company has generated relatively volatile revenues of between $6.1M and $9.1M, and Owner's Discretionary Earnings (ODE) of a loss of $410K to a high of $429K, which are largely due to an erratic influx of large projects. The company is in a pilot program with a current large client which has the potential to generate approximately $3.6m in hardware revenue during the first quarter of 2023 plus an additional $900k in integration and installation service. The overall opportunity when completed will generate a healthy gross profit margin. Additionally, they have just been informed of winning a $350k revenue deal with another large retailer, which was just signed for the 1st quarter of 2023. The company also has several other fairly large near-term opportunities.
While they enjoy very strong, long standing relationships with their major customers, they have been reluctant to pass along increased costs onto their customers, which has contributed to its average break even ODE over the past few years. The Government’s Producer Price Index (PPI) data, which tracks prices paid to the producers of goods and services, reveals a steep year-over-year price hike for host computers and servers -- a 21% surge over pricing levels in June 2021. We are estimating that even a nominal 10% increase in their pricing could have driven an additional $550K of ODE for YTD 2022 or nearly an additional $2M in its projected ODE in year 2023.
