TECH-4066
IT Staffing/Consulting Company in South Atlantic USA

UNDER LOI


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EXECUTIVE SUMMARY

This IT staffing and consulting Company has grown very rapidly in the past few years, almost doubling its current revenue from 2015. From about $1.8 million in 2015 its current revenues has jumped to $3.3 million. Much of the revenue has come from hiring and placing candidates with niche skills. Currently it has 23 resources working with 21 different clients. The Company only works with Tier 1 vendors, majority of whom are established Nationwide IT Staffing firms. The Company is also a Prime Vendor for 3 clients, and has direct vendor relationship with 17 states through their managed service provider.

The Company’s business is divided between two divisions:

IT staffing has been the revenue and profit generating business so far. However, the Company just completed work on some products and is wanting to actively focus its activities on selling those products by divesting the staffing division of the Company.

Staffing division is poised to continue making growth. Currently there are 23 active resources in the Company generating about $3.3 million in revenue and about $201K in net profit. Their skill-sets varies from programming to niche tools. The Company has cherry-picked employees based on skill-sets and trends in the market. To compete in this crowded IT staffing market, the Company has made a conscious decision to hire candidates with skills in Big Data, Analytics, Cloud and UI/Ux. The hiring and vetting process in place has ensured that only those with good technical and communication skills are brought onboard.

In addition to the 23 on billing, there are 21 resources that were interviewed and screened last year on various niche skills, have obtained H1B visas in 2016 and 2017, and who will come with the purchase of this Company. Half of them can start work right away. Within the next 12-24 months, with these resources deployed, the Company will be on track to make about $5.2 million dollars in annual revenue (factoring in some attrition in the Company), and about $409K in net profit. This is not counting any other placements that the buyer will make, or the projects that it could win, based on the prime vendor status of the Company.

Besides four Companies with whom it has prime vendor relationships, it also has prime vendor relationships with 17 states through their managed service provider. Additionally, the Company has submitted proposals to State RFPs and successfully won and executed several IT projects. These clients have provided the company with a strong Reference. The Company is willing to transfer RFP proposal templates, past responses, etc. to the potential buyer. It can train buyer’s staff to effectively write proposals to win project work.

STRENGTHS

The main strengths of this Company include the following:

GROWTH POTENTIAL

The Company, as mentioned earlier, has a large pipeline of resources which could be valuable to a buyer. In addition, its prime vendor relationships with a few companies and a number of state agencies can also create a lucrative staffing and projects opportunities. Company is willing to provide training in writing proposals for such projects.

REASON FOR SALE

The seller has a passion for Product Development and has developed three products which are in Beta release. They have been well received in the market and seller has already signed up 6 clients onboard. Additionally, one of seller’s product has already garnered interest and Seller has been approached by buyers on potential sale of the product. Seller’s initial plan was to spin off the Products as a separate company and run both companies. However, with market demand for its core products, seller wants to self-fund and aggressively grow on the product front. Seller also works full time as a IT Director of DevOps and Architecture with a Fortune 500 company and is stretched thin for time. The seller therefore wants to divest the IT staffing/consulting arm of the firm to allow more time for Product development and to invest funds from the sale of the Company in Product development.

WHAT IS OFFERED FOR SALE

The Staffing/Consulting division is being sold. This includes all of the current consultants in the US and all the ones who will be in the US soon (H1 approved candidates). The product division is being retained by the Seller. Seller plans to start the products as a separate company. The Company currently has an offshore location in India and has recruiting, marketing and admin staff there, in addition to two Citizens in the US for Accounting and Offshore Support. Except for the Accountant, the Company plans to keep all offshore resources for product support and marketing. The Accountant will be retained until Buyer’s accountant can take over.

FINANCIAL HIGHLIGHTS

The following financial summary is based on the active resources, their billing and corporate expenses today and in future based on deployment of resource pipeline and taking into account some attrition.

 

CURRENT**

12-24 months*
(Assumes 20% Attrition)

Annual Revenue

$3.4 million

$5.2 million

Net Pre-Tax Profit

$201K

$409K

* Estimate does not consider any additional candidates placed or project work secured due to prime vendor relationship
** Recently won $350K new project from a major Financial company and additionally a new resource to be placed in this Company.

THIS IS UNDER LOI