Deal Alert: Media & Entertainment Cloud Storage & Support Provider

📍 Location: Location: U.S.
💰 Asking Price: $1.6M
💸 Revenue: $1.04M | Cash Flow (SDE): ~$486K

🌟 Why This Business is Great:

✔️ Recurring Revenue Engine
80%+ of revenue is recurring, split between cloud storage and support contracts. In a sector where churn can kill margins, this stickiness is a huge advantage.

✔️ Trusted by Major Broadcasters
100+ broadcasting stations nationwide rely on this company. A 20-year reputation in a niche vertical (media & post-production) makes it tough for a new entrant to displace them.

✔️ Cost Advantage vs Big Cloud
Clients get the same performance as hyperscalers, but at a fraction of the cost. That pricing moat is hard for AWS, Azure, or Google to match in such a specialized niche.

✔️ Efficient, Semi-Automated Ops
Owners work <10 hours per week. With a 3-person team, most functions are automated — a lean, efficient model already in place.

✔️ Healthy Revenue Mix
46% services, 32% cloud, balance hardware. The fact that support is nearly half of revenue (and growing) shows clients are “bought in” beyond just storage.

🚧 Challenges & Considerations

❌ Client Concentration
Top 3 clients represent ~66% of revenue. That’s a real risk if one walks. Mitigating concentration is a must-have in diligence.

❌ Indirect Sales Dependency
78% of sales are through partners. That drives volume but leaves the company exposed — they don’t fully control the client relationship.

❌ Tiny Team
3 employees total. That keeps margins high but also creates fragility. Key-man risk and execution bandwidth will be important to evaluate.

🚀 Opportunities I See

🔹 Cross-Sell More Support
Support is already 46% of revenue and trending up 30%+ since 2020. Leaning into this could deepen client relationships and expand margins.

🔹 Expand Verticals
The same storage + support offering works for gaming studios, universities, and even government archiving. Diversification reduces concentration and grows TAM.

🔹 Build Direct Sales Channel
Moving away from 78% partner dependency unlocks pricing power, margin, and stronger client stickiness.

🔹 Double Down on AI & Automation
They already have a roadmap around AI-powered archiving workflows. With modest investment, this could become a clear differentiator in the next 3–5 years.

🔍 My Analysis:

At $1.6M, this deal values the business at roughly 3.3x cash flow, which is fair for a tech services company with 80% recurring revenue and long-term media clients. The main concern is client concentration and heavy reliance on partner-driven sales, which leaves control limited. But the upside is clear: this is already a lean, semi-automated business with strong margins, trusted relationships, and room to grow into new verticals. With a push on direct sales and client diversification, a buyer could realistically scale EBITDA toward $1.2M in the coming years, turning a lifestyle business into a strong growth platform.

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