The criteria below is based on characteristics we value. We do not expect your business to meet all of the requirements. We are looking for deals that meet most of the categories below.

Revenue

  • Annual Revenue: $3M - $6M

  • Revenue Model: Contracted or recurring revenue, or capable of becoming so with minor improvements

  • Consistency: Stable revenue year over year in varied market conditions, with growth over the past three years

  • Sales Team: A portion of revenue generated by a sales team, with a customer base comprising businesses rather than individuals

  • Customer Diversity: At least 20 customers total, with the top five customers accounting for no more than 30% of total revenue, and the top customer no more than 10%

Profitability & Retention

  • EBITA/SDE: $750K - $2M

  • Margins: Achieves industry-average or slightly better margins, avoiding extremes that suggest underperformance or unsustainably high performance

  • Customer Experience: Offers an exceptional customer experience, suggesting minimal impact on customer relations during transition

  • Stability: Customers are varied enough to avoid significant impact from any single macroeconomic factor

  • Pricing Power: Ability to raise prices year over year to at least keep pace with inflation

Cash Flow

  • Revenue Conversion: Converts revenue into cash quickly and predictably, ideally within 45 days, to prevent cash crunches

  • DSO Tracking: Day Sales Outstanding (DSO) that doesn’t fluctuate by more than 10 days month-to-month

  • Collection Systems: Automated systems for collecting cash, minimizing the need for the business owner to pursue collections

  • Collection History: Proven track record of collecting overdue balances without legal or collection agency assistance

  • Cash Flow Generation: Generates sufficient monthly cash flow to support growth, without reliance on additional debt/equity injections to achieve a growth rate of 10-40% per year

Team & Culture

  • Owner's Role: Owner acts as CEO/President or Chair, focusing on strategic decisions rather than day-to-day operations

  • Culture: Seller has created a business to be proud of, with a positive company culture and employees who enjoy working there

  • Employee Compensation: Employees are fairly compensated, not awaiting catch-up raises, have low turnover, and are committed to the company’s vision

  • Organizational Structure: Resembles larger players in the industry, without numerous specialized roles

  • Hiring System: Proven hiring and onboarding system that can attract new talent and support growth as needed

  • Compliance: Application and hiring systems meet all legal, ethical, and business guidelines, with well-documented processes

Market Position

  • Product/Service Desirability: Offers products or services that customers are unlikely to eliminate from their budgets

  • Expense Proportion: Products or services represent a smaller line item relative to customers’ overall expenses

  • Industry Growth: Operates in an industry growing at or above GDP rate

  • Regulatory Stability: Not at risk for major regulatory changes or innovations that could eliminate its products/services

  • Industry Stability: Competitors in the industry have demonstrated long-term success with predictable growth and stability

  • Market Tailwinds: Revenue growth driven by favorable market conditions

Tell us about your business.

If you made 3/5 of these screens we would love to talk with you.

Contact us