Oct 14th (Mon) 8am NY

Deal Alert: Remote ERP Service Provider for Municipalities

📍 Location: U.S. (100% remote)
💰 Asking Price: $8M
📊 Revenue: $3.97M (2024 TTM)
💼 Cash Flow/Earnings: $1.93M

🌟 Why This Business is Great:

Exclusive Niche with High Barriers to Entry

What immediately stands out is the unique positioning of this business. As an ERP service provider to municipalities, it operates in a niche with significant barriers to entry. Local governments require specialized systems and support, and building trust in this sector takes years. This company has done exactly that since 2018, consistently growing, even through challenging times like the pandemic. The client base, focused on the public sector, brings both stability and long-term contracts, making it less vulnerable to economic shifts than other industries.

Scalable Model and Strong Team

Another key highlight is the company’s fully remote operation. A team of 30 skilled employees has built the foundation, and the pipeline of upcoming projects ensures strong future growth. The remote structure not only cuts down on overhead but also gives it the flexibility to recruit top talent from across the country. As municipalities increasingly look to digital transformation and AI solutions, this business is well-positioned to scale with minimal additional infrastructure.

Recurring Revenue from Mission-Critical Services

ERP implementation accounts for 85-90% of revenue, which is substantial, but what’s particularly attractive is the potential for additional revenue streams from ongoing system support, Microsoft 365 solutions, and AI-based software. ERP systems are mission-critical for local governments, meaning the need for continued support and system updates provides a strong recurring revenue base. Once a municipality is onboarded, they’re unlikely to switch providers, creating high client retention and a reliable income stream.

Opportunities for Growth:

1. Public Sector Expansion:
With 2,500 potential municipal clients yet to be tapped, the opportunities for expansion are immense. A strategic push into underrepresented regions could result in significant new contracts.

2. Service Diversification:
There’s a huge opportunity to introduce additional services like managed IT support, AI software, and IT recruitment. As municipalities increasingly look for digital solutions, this business could lead the way in providing those services.

3. Pricing Optimization:
The company’s pricing is currently lower than its competitors, making it a prime candidate for pricing optimization. Slight increases in service fees could lead to a boost in revenue without significantly affecting client retention.

🔍 My Analysis: This business has a strong foundation with significant untapped potential. Its position in the municipal ERP space means steady, recurring revenue from mission-critical services, making it highly reliable. The 100% remote operation allows for scalability with minimal overhead, and the team is skilled and ready for growth. While 60% of revenue comes from one client, the company has a healthy pipeline of projects, and its competitive pricing makes it attractive to new clients. The SBA eligibility is a big plus, offering favorable financing options, and the VP of Delivery stepping into the CEO role ensures smooth leadership continuity. With opportunities to expand into new services like AI and managed IT, and a vast market of untapped municipal clients, this business is well-positioned for rapid growth with the right buyer.

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