Determining the Value of your IT Services Firm
Shoot the Moon with Revenue Rocket
English - March 23, 2020 17:27 - 8 minutes - 7.64 MB - ★★★★★ - 6 ratingsManagement Business Entrepreneurship business growth selling your business m&a process growth strategy it services m&a managed service providers cybersecurity cloud services custom application Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
How do you determine the valuation of your IT Services Firm? The simple answer is: multiply the revenue. Business valuation can be used to determine the fair value of a business for a variety of reasons, like positioning it for sale.
Driving the Valuation of your IT Services Firm:
Sustainable and growing profitability is what drives valuations for IT Services providers. This is a key factor in creating buyer interest. Especially if your firm has more than 50% recurring revenue. The buyer has to get to a forecasted return rate to successfully be in a position to buy your business.
The truest meaningful metric of a valuation is having a willing buyer and a willing seller coming to an agreement on a purchase price.
1 + 1 = 3
Get somewhere your business can’t get to alone. 1+1 = 3 to a successful merger or acquisition. RRCG does around 400 valuations a year across the IT Services space which gives us a great perspective on knowing how to help value a business.
When calculating the valuation of your business:
You can expect your business to be worth 6-8 times trailing EDIBTAwalk a mile in the shoes of a seller and walk a mile in the shoe of the buyerget to a forecasted return rate: that is in excess of a 5-year return based on a cash flow basisHave a willing buyer and a willing seller to set the MBP (market-based price)
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