K-12 Education Value-Added Reseller under LOI

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by a searcher from University of Pennsylvania - The Wharton School
in Indianapolis, IN, USA

2yrs ago

K-12 Education Value-Added Reseller under LOI

I am looking for operators, investors, or searchers with expertise in the K-12 education market and/or experience with Value-Added Resellers (VARs). If anyone is willing to connect, please send me a note! Here is more detail on the deal and target:

$6.8M Sales
$800K Adj. EBITDA
Located in Midwest
9 employees

Sells interactive panels, audio equipment, and other technology to K-12 schools throughout Midwest. Also provides services such as installation and teacher training. Top risks associated with this target are 1) customer concentration, 2) supplier risk inherent in the VAR model, 3) maintaining the current sales team, and 4) whether the increase in federal funding inflated sales and earnings inredactedOf ~100 total customers in 2022, one customer made up 25% of sales, five accounted for 50% of sales.

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reply by a searcher 2yrs ago
from Texas A&M University in Johnson City, TN, USA

For your top customers, are they consistently "recurring"?

You could ask for a list of products sold, quantity, and percent of total to the customer. This could even be anonymized. You are looking for peaking quantities that may be robbing future sales.

If not recurring, what's the pipeline like? Don't be afraid to aim lowering on price and terms.

If this is a non recurring, CapEx spend for your customers, you need to understand interest rate impact very well right now, IMO.