IT Consulting/Value added reseller/Cybersecurity valuation

searcher profile

April 27, 2021

by a searcher from Columbia University - Columbia Business School in Jacksonville, FL, USA

I am looking at a value added reseller, IT Consulting, security firm with about 10M in revs and 1M in EBTIDA. Revenue breakdown is as followed:

84% VAR (Value added reseller)
9 % Consulting
7% MSSP (managed security service provider)

Company grew 30% last year, but -7% year before. Any valuation guidelines would help.

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commentor profile
Reply by a professional
from University of California, Berkeley in Calgary, AB, Canada
The percentage of revenue from services is counter-trend. IT is moving to a service- SaaS- and managed-based industry. I would be cautious with a company relying mostly on selling gear, which is low margin and very much price dependent. It all depends on the type of gear they are selling, but for the most part, you will be competing with Amazon, Newegg, CDW and other powerhouses of the industry that sell directly to consumers and SMEs. In my opinion, this would make sense if you are selling hardware to telcos and service providers, or if you can define a strategy to convert the 84% VAR revenue to service-based recurring revenue.
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Reply by a searcher
from Babson College in 125 Summer St, Boston, MA 02110, USA
Leigh, in addition to buy/run/sell of Sage Data Security, Scott and I took a substantial cloud-based VAR under LOI and nearly went through with it (wish we had). Happy to spend a few minutes with you if you're still pursuing the deal. cburckmyer at g mail dot com
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