Sale of Enterprise Software and IT Support Company
The business was established over 20 years ago and supplies an enterprise scale print management software product created in Open Source. This is essentially a niche product for large organisations which ensures the printer job queue is efficient and effectively managed.
It is a unique product that is not matched by the offerings within the large Enterprise Management Software suites and as result people who’ve benefitted from it in their business environment are keen to keep using it. Consequently, a healthy revenue was driven by a good number of annually renewable support contracts (at over £150k per annum) and new license sales made up the remainder to over £180k per annum. This was at a profit margin in excess of 65%.
Unfortunately the vendor was suffering from health problems and he was fearful of what would happen to his product and customers should he ever be unable to continue. With that in mind, he wanted to sell the business to a partner that would ensure continuity. At the same time, it would free up his time to concentrate on completing the re-write of the product that would bring in significant additional functionality that would further secure the future of the product.
What Hornblower Did
We launched the marketing for the business in March 2013. The business generated a significant amount of interest and by June 2013 we had agreed Heads of Terms with a perfect partner whose own offerings and background are also in consultancy and Open Source software products. This was a natural new home for the business.
Business owners are both commercially focused entrepreneurs but also, they are the creators and guardians of their business and as such they are often emotionally wedded to it. The challenge for the broker is to find a perfect partner for the vendor on both the commercial and the emotional levels.
In this case, the business transferred to a very good partner who gave a role to the vendor that allowed him to continue his involvement through the early stages of his retirement. Due to the level of competition for the business that we generated, we were also able to obtain a full market value with the majority of the consideration paid on completion and an ongoing commission agreement in place.
For the buyer, he acquired a business that delivered an excellent on-going revenue stream but also a unique product that had significant further potential. At the time of sale, the vendor and the buyer were in discussions with a major global printer hardware manufacturer. Watch this space …
SOLD – November 2013