Determining the Value of your IT Services Firm

<p>How do you determine the valuation of your IT Services Firm? The simple answer is: multiply the revenue. Business valuation can be used to determine the fair value of a business for a variety of reasons, like positioning it for sale. </p><p> </p><p>Driving the Valuation of your IT Services Firm:</p><p>Sustainable and growing profitability is what drives valuations for IT Services providers. This is a key factor in creating buyer interest. Especially if your firm has more than 50% recurring revenue. The buyer has to get to a forecasted return rate to successfully be in a position to buy your business.</p><p><i><strong>The truest meaningful metric of a valuation is having a willing buyer and a willing seller coming to an agreement on a purchase price. </strong></i></p><p> </p><p>1 + 1 = 3</p><p>Get somewhere your business can’t get to alone. 1+1 = 3 to a successful merger or acquisition. RRCG does around 400 valuations a year across the IT Services space which gives us a great <a href="https://www.revenuerocket.com/podcast/the-luxury-of-perspective/">perspective</a> on knowing how to help value a business.</p><p>When calculating the valuation of your business:</p><ul><li>You can expect your business to be worth 6-8 times trailing EDIBTA</li><li>walk a mile in the shoes of a seller and walk a mile in the shoe of the buyer</li><li>get to a forecasted return rate: that is in excess of a 5-year return based on a cash flow basis</li><li>Have a willing buyer and a willing seller to set the MBP (market-based price)</li></ul><p> </p><p>Try our Valuation <a href="https://www.revenuerocket.com/mergers-acquisitions/sell-services-firm/">Calculator</a>!</p>