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Valuation of IT Services business?

We have an IT Services (CRM consulting) business which generated $2Mn in revenues in 2009 and $370,000 in Gross profit. What is the prevailing valuation for such a business.

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Answers (2)
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Don - thanks much for the detailed response. I have provided the information below:
net profit: 240k
cash flow: 370k
clients: 8
2 clients account for about 40 percent, rest is evenly distributed among the remaining. No federal or state clients. Business can be run with little oversight.

Jul 10, 2010
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The BAF Group LLC

How many consultants are there? Gross Profit is not the issue; Net Profit, and actually Cash Flow are the keys. How long have you been in business? How many clients do you have? Does any one Client represent five percent or more in Revenue, and if so, how much more? Are your clients private companies, or through Local, State or Federal contracts? And if there are contracts, what happens when ownership changes? Does the business need to be sold only as a stock transaction, as a result? What is your personal role in the business and, if you suddenly sell and leave, what does that do to the Company and its Revenues/Cash Flow?

All of these issues - and more - come into the mix.

Jul 10, 2010