Business Start Date: 2013
Business Valuation: €2,000,000 EUR (€700,000 capital included)
Employee Number (Inc. Owners): 12
Business Model: B2B/B2C Cloud Service SaaS
Industry: Mobile Device Management (MDM), Cloud Solutions
Percentage Being Sold: 100%
Sales (TTM): €489,991.00
Net Profit (SDE): €191,237.00
Business Multiple (TTM Revenue): 4.08x
Business Multiple (TTM EBITDA): 10.46x
Paying Clients (TTM): 1100+
Tagline: A low-churn 10+ year old Enterprise MDM software company with a notable client base of 1,100 organizations.

General Highlights

• 10+ year old validated and competitive Enterprise MDM software 

• Over €700,000 in cash in the bank (not included at asking price - must be added to listing)

• Notable client base includes national educational institution, banks and energy enterprises

• Reasonable valuation of 6.79x adjusted multiple given the stability of cash flows

Niche

The company’s area of expertise includes Mobile Device Management (MDM), Cloud Solutions, Enterprise Mobility Management, Enterprise Solutions, IT Security and Management, Product Development, and Software Development. The company provides its clients with the most relevant solutions to address their IT needs and requirements, while minimizing security risks. In a nutshell, the company’s software allows enterprises to centrally and remotely manage mobile devices. Device management may include setting up the device, modifying configurations, installing required apps, transferring files, provisioning access to the enterprise’s database, configuring security settings and performing updates.

The Company

The business is a software development company that is managed by its CEO. The CEO manages and supervises all aspects of the organization with special focus on Sales and Business management. Also, due to manageable organization size and limited headcount all people are reporting directly to the CEO. All other owners are actively working in the company.

Customer Base

The company's products are being used by more than 1,100+ organizations with over 220,000 mobile devices, however the majority of those are using the MDM solution as a Cloud service (SaaS) provided via CARNet. CARNet - Croatian Academic and Research Network (www.carnet.hr) is a public institution operating within the Ministry of Science and Education of Republic of Croatia in the field of information and communication technology and its application in education on national level. It includes 1,200 public schools in Croatia which are using over 200,000 mobile/tablets devices for primary education. 

In terms of direct customers with an active billing relationship, the company currently has around 20 organizations. With most of its customers, the company has a multiyear business relationship with a very low churn rate. Most of the customers renew their contracts (licensing or services) on a yearly or multi-year basis.  Some of the customers are managed via partners.

Customer base spans across many spaces: Banking and Finance, Public sector, Education, Energy, FMCG, Hospitality, etc. and include reputable organizations such as Privredna banka Zagreb (second biggest bank in Croatia), HEP Group (national energy company), Ministry of Foreign and European Affairs to highlight a few.

Although the MDM solution is a vertical type of a solution and can be used in various scenarios (on-premise, private or public cloud) the company is primarily focused on customers that require “on-premise” solution or MSPs that would use the company product to build out and offer their own MDM SaaS from the Cloud.

Revenue Sources

Revenue is being generated mostly from sales of software licenses. This represents on average over 70% of the company's revenue. The rest is revenue from services associated with implementation of the software, support and maintenance. Over the past two years, recurring revenue represented 80% of total. The company's largest customer CARNet, which signed the contract in 2019,  is responsible for approximately 72-75% of the total sales over the past three years. 

Currently the company has 3 finished and commercially mature products deployed in production environments by customers. In order of maturity and business importance/impact those are:

The Company - €1.9 million combined over the last three years or 95% of total

Revenues for this product increased from €575,000 in 2020 to €777,000 in 2022. The company Product is a Mobile Device Management solution and license sales from this product are the major revenue source for the company. The 1st version of the company software was deployed over 10 years ago. It can be implemented as “on-premise” (a.k.a. The Company Product Enterprise) or “cloud” (private or public) SaaS solution (a.k.a. The Company Product Nebula). 

The Company Product Enterprise is primarily targeted at enterprise organizations mostly on a perpetual per-device license arrangement.  Perpetual license comes with large payment upfront and then annual payments if the customer wants to have access to the new features and software updates. The majority of customers choose this option.

The Company Product Nebula is targeted at MSP companies with a special MSP licensing model based on a subscription for a specific number of devices. The MSP business model is still new and does not generate revenues yet with only 1 active MSP contract in place.

Software Tool - €47,000 combined over the past three years

The company has a software tool for managing digital certificates and PKI infrastructure. It is primarily developed for and targets Microsoft PKI service (Microsoft AD CS) that is widely used by companies across the world. Its potential customers are organizations that issue and manage their own digital certificates via Microsoft PKI (CA) service. The licenses are offered mostly on a perpetual license basis but a subscription model is also available. The product can be distributed in a scalable way as a downloadable package or via Microsoft Azure Marketplace (on-line store).

The first version was deployed in 2017 and has 8 organizations using it today.

The Company Product Authenticator  - €33,000 combined over the past three years

The Company Product Authenticator was developed in 2020 and is the latest product in the company product portfolio and is deployed with two enterprise organizations(Ministry of Foreign Affairs and PBZ - a major bank in Croatia). It offers a solution for Multifactor Authentication (MFA) for a wide range of applications, services and operating systems. This product is heavily integrated with the MDM solution.

Financials

Sales (€)

2018 - 122,243

2019 - 189,129

2020 - 615,558

2021 - 588,823

2022 - 809,418

2023 - 441,543

2024 - 650,529

2025 - 487,899

Profit (€)

2018 - 52,264 

2019 - 81,396 

2020 - 284,982 

2021 - 299,645 

2022 - 268,491

2023 - 118,143

2024 - 242,645

2025 - 213,051

Operations

The Backend (server) MDM service implementation depends on if the customer chooses “on-premise” or SaaS model. For on-premise the company MDM product implementation process must be performed by trained IT professionals who install and integrate MDM solutions into the customer’s IT environments. Implementation can be performed remotely with some on-site support from customer IT staff.

For providing MDM as a service (SaaS via MSP partner) their customers must provide MSP with a set of information and some integration parameters so the service can integrate with customer IT environment services.

On the client (end-user) side, MDM service activation depends on mobile platform and requires zero to low interaction from end-user (for Apple devices visiting a link and enrolling device in MDM, for Android taking picture of QR code in Mobile App).

Functionally organization is organized into few teams:

The Development Team is divided into server-side and client-side development sub-teams working in collaboration on development of our products. There is also a separate R&D team that focuses on technology research and prototype development.

The Technology Team is focused on Customer support, Product support and Testing to ensure quality assurance and customer satisfaction. This team is also heavily involved in product design and system architecture design.

The Business, Sales & Management Team is responsible for all business operations, administration, development and management as well as planning and execution of Sales and Marketing activities.

Team Structure

The Company is made up of around 12 people. Three in the Business, Sales & Management Team. Five in the Development Team, and four in the Technology team. 

Currently there are several employment models in place, vendor type contracts for the 4 owners, 4 fulltime employees, 1 part time employee, 1 ex-owner position with a vendor contract , 2 junior employees with student contracts are expected to be transitioned into “full-time”, and BDM position was hired recently on a “try-out” basis.

All owners expressed flexibility with regards to remaining onboard depending on the deal arrangement, salaries and expectations of the new owner.

Marketing & Growth

Most customers were acquired through "organic" sales or referrals. Marketing has not been utilized in the sales efforts and remains an opportunity for future growth. 

Expansion Opportunities:

Replicating success in the education world across other verticals like Tourism and Logistics. 

Building out the partner network and enlarging the list of MSP partners both domestically and internationally. 

International expansion through European and then North American MSPs.

Partners

The company has established technology partnerships with key players in or related to Mobile Device Management areas like Apple, Google, Samsung, Microsoft and Cisco. Those partnerships enable the company to develop their MDM product. The strategic advantage here is that the company established these technological partnerships about ten years ago which allowed the company to retain access to specific and very powerful technology models that are no longer offered to their new partners. As the partners rolled out their new in-house built technology models with fairly limited functionality for MDM, the company product remained on the older, more flexible and customizable platforms which allows the company to offer its customers a greater degree of customization and functionality. This advantage is expected to remain over the next few years while partner’s new platforms catch up. 

The partnerships also serve as a validation of the technology and trust towards the company product as a solution provider in this sensitive area of MDM.

In terms of sales the company has a couple of active sales partners on the local market which include Avola Solutions and Infigo, however international market growth remains a significant growth potential. Besides revenue from license resale, a major motivator for their potential partners should be sales of services (implementation, integration, support) for their products.

Main Expenses

Main expenses are employee cost (employee salaries and related taxes) as well as vendor cost for co-owners working in the company. They amount up to approximately 60% of total operating expenses, with the remainder of 40% spent on office-related, back-end and infrastructure expenses. Business owners are paid market-based salaries totalling approximately €130,000 combined.

Work and Skills Required

There are 4 owners who play an important role in the company. One is responsible for general business management and sales; another is responsible for system architecture and solution design; third is responsible for tech research and prototype development; and the final one is responsible for server-side operations.

Most of the co-owners except the CEO are focused on technology and are leveraging their strong IT background and significant skills and experience to do their work. The new owner would have the flexibility to either keep the existing executive team in place to operate the business or bring this under the expertise of the existing team if such exists.

Who is the ideal buyer for this business?

Perfect buyer is a company with strong international IT sales capabilities or partner network who is looking to expand their product or services portfolio for enterprise customers by bringing their products into the local market and taking the company products across their networks.

Alternatively, a Private Equity fund that has an established team of IT executives and a partner network capable of quickly scaling up the sales of the company’s main product could find this opportunity attractive given the low payback period, which could be largely reduced with scale.

What (if any) post sale support is included with the sale?

The business currently has 4 owners who agreed to stay on board post sale to manage work on the tasks they perform now. They are open to negotiations on how long they will stay which largely depends on the compensation and the overall approach of the buyer. The team is generally very enthusiastic about the future international expansion and see themselves as being instrumental in helping the new owner execute.

Valuation

Taking into account  €700,000 (US$756,000) in cash, this leaves the company with €1.3M  in business valuation, which is reflective of a multiple of 6.10x SDE of €213,051.00

The Multiple of 6.10x is a fair multiple given the stable nature of sales the company realizes given the long term nature of services contracts. 

SEO Analysis (Ahrefs or SEMRush)

Authority Score: 22

Backlinks: 225

Referring Domains: 21

Expansion Opportunities for New Owner

The company has several potential growth opportunities both near and long term. With very limited marketing employed to date, the lowest hanging fruit is just replicating the success the company has enjoyed in the education world across other verticals. Management is particularly interested in targeting enterprise clients in the Tourism and Logistics verticals – given the success of implementation with existing current customers in those spaces and the fairly large size of those verticals with Croatia being a popular tourist destination. The Logistics vertical is large with the rise in delivery services. 

The next leg of growth would be to continue on what the management has already started with - building out the partner network and enlarging the list of MSP partners. This could be done both domestically and internationally. 

The last and the most meaningful expansion opportunity lies in the international expansion of the company products. With the software development completed and ready to scale, the management sees international expansion through partnerships with European first and then North American MSPs as the most logical next step. New owner with capability to expedite this international expansion process stands to benefit the most from the deal.

Barriers to Entry

Developing an MDM product requires significant IT skills and specific knowledge about mobile device platforms. It would take significant effort & time to build a scalable and mature MDM product such as the company product and some of the technologies used in their product are no longer available to new MDM vendors by mobile platform provides (i.e. Google no longer accepts new registrations for custom DPC apps). The new developer would be forced to use Google’s (still fairly early in the development stage) technology model which would not be able to compete with the company’s product functionality for at least another 2-3 years and this would be heavily dependent on what Google decides to build and when.

In addition to the lengthy development process, the trust component is critical in this business. Procuring a contract is a multi-month or multi-year process as the enterprise would be granting access to its mobile devices, a critical and sensitive piece of infrastructure. The company has been validated by major banks, government agencies and large corporations over a 10 year period of time. The company has a list of credible and recognizable corporate clients which would not be easy to replicate.

Lastly, while the largest competitors such as Microsoft, IBM, VMware, and Citrix could pose a risk, they have not been able to win against the company product simply because clients require some modifications and customizations to match their specific needs and the company is capable and willing to offer those as they have a complete control over the product, while the larger players would find this cost prohibitive to implement for each of the clients.

Reason for Sale

The owners have no significant or pressing reasons to sell the company. Sale of company might be a good thing for future business development since initial owners successfully completed several initial stages of business development and built a solid and robust product. The existing owners validated the business model and product value and scalability with local customers and established local market leadership. 

It is now time for the company to start with significant business growth and expansion into international and global markets and if the buyer has skills and experience in that area, this might be an optimal time for ownership change.

Miscellaneous Details

The company shares of the four owners split up as follows: 33%, 30%, 19%, and 16% with the rest owned by the company (reserved for future partners).

All Assets Included with Sale

1. Product IP and Technology stack 

2. Bank account with €700,000 in cash (not included at asking price - must be added to listing)

3. Domains

4. Website and all content

5. All customer Bases (existing and future)

6. Customer Contracts

7. Hosting Accounts & Servers

8. Social Media Accounts

9. Employment and Vendor Contracts

10. Future Sales

11. Partner contracts

12. Misc Accounts