SDVOSB currently under LOI, questions about EBITDA multiple

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October 30, 2024

by a searcher from Pepperdine University - Graziadio School of Business and Management in Denver, CO, USA

I’m an SDVOSB, and I’ve just signed an LOI with another SDVOSB whose owner is looking to retire. Their EBITDA is currently in the $150k - $200k range. I’m now actively seeking funding options. I’m aware of Live Oak’s GovCon/SDVOSB vertical(so I will be asking them as well about advice in this niche market,) but are there any other resources or funding sources you’d recommend?

While the LOI is in place, we haven’t settled on a final purchase price, so there’s room for negotiation as I complete additional due diligence. Given that I’m the owner’s only lined-up buyer and that the SDVOSB designation limits other options for the seller, I’d appreciate any insights on suitable EBITDA multiples for this type of deal?




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Reply by a searcher
from University of Houston in Helotes, TX, USA
How real is that EBITDA? How much of a fight are you going to have winning the recompete for whatever contracts you have on the books now? Are you the source? is the work just a race to the bottom on price? Is the recompete going to be SDVOSB? Or something else? How’s the SPRS?

What multiple should you use? One that gets it as cheap as possible.
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Reply by a searcher
from Carnegie Mellon University in Chapel Hill, NC, USA
What is the composition of the income? Is it tied to one or more agency contracts? How much time is left on those contracts? Multiple is lower for this SDE amount but may increase for stable income streams.
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