Sell a Managed IT Services Business

Recurring invoices need a closer look

Separate contracted monthly services from hardware resale, projects and occasional support. Similar annual revenue can produce very different cash flow when a buyer accounts for labor and vendor costs.

Keep contract dates, cancellation rights and customer approvals in one schedule. A long customer relationship is useful, but it is not the same as an agreement that transfers to a buyer.

• List recurring revenue by customer and service.
• Identify agreements that require assignment consent.
• Show service delivery costs alongside billing.

Price the work you still do

If you handle escalations, sales and account management, a buyer must either do that work or pay someone. Recasting should reflect a realistic replacement cost rather than adding back every dollar of your pay.

Document who holds technical knowledge and how client credentials are controlled. Discuss access transfer through a secure process after a buyer is qualified; do not hand over credentials with an initial inquiry.

Keep the pipeline separate from proven earnings

A prospective customer and an unsigned proposal are not current profit. Support the asking price with reported results, then explain opportunities as opportunities.

Review a revenue schedule over several years. If one customer supplies a large share, prepare a retention plan before the buyer makes that risk the reason for an earnout.

Start without exposing client identities

The first discussion can cover revenue, owner involvement and timing. Detailed customer names and financial records should wait for buyer screening, confidentiality terms and an agreed diligence process.

Keep the sale moving

• Review the earnings adjustments
• Check customer concentration
• Request your confidential seller valuation

Use the valuation form to outline your sale, or call (408) 555-0179.