Business Name: Confidential

Business Start Date: 2005

Business Valuation: $15,300,000 USD

Percentage Being Sold: 80% - 100%

Sales (TTM): $4,296,187 USD 

Recurring Revenue (TTM): +/- $2,300,000 USD 

Net Profit (SDE): $1,255,997 USD

Business Multiple (ARR or EBITDA): 11.94x Profit

Users (TTM):  59,503 devices with prevention tools; 238,635 monitored devices; 15,681 users with cyber hygiene tools

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Summary 

The listing is an 18-year-old disruptive technology and solution provider in Central and Eastern Europe, with a formidable team of cyber security experts. As a dedicated cybersecurity distributor, the company aims to deliver cutting-edge security technologies, ones that fortify the digital autonomy of nations and enterprises against digital adversaries. It is being offered as an almost turn-key acquisition for 15.3M USD with a full team in place to tackle large growth opportunities within their protected but growing niche.

The Opportunity

The company is an expertise-driven technology and solution provider, dedicated to serving the Central and Eastern Europe (CEE) region with essential cybersecurity products in a rapidly growing market. Within the CEE landscape, many major cybersecurity entities either steer clear or face challenges in aligning with a global strategy. In contrast, the company charts its own distinctive course, adapting to local needs and placing a strong emphasis on customer satisfaction. This places them in a prime position to emerge as a trusted market leader in a world where cyber threats evolve at an astonishing pace.

The company’s ethos and vision for cybersecurity don't merely hold regional significance but have the potential to benefit global markets. With the right infusion of capital and a dedicated team, the company’s local triumphs in the CEE can evolve into a global offering, tapping into a market a hundred times larger.

In the future, it is set to launch managed cybersecurity services while broadening its portfolio to encompass much-needed training capabilities. Ultimately, the company aims to cultivate a cybersecurity community comprising experts who are honed through the company’s cyber range and who adopt the company’s approach. They will leverage the company products to safeguard a diverse range of customers, forging a resilient defense against an ever-evolving landscape of cyber threats. 

General Highlights

• The company is comprised of 20 employees and full-time partners, bringing their extensive expertise to the field.

• The company's network includes 415 active reseller partners, fostering robust connections.

• With 757 engineers certified through their training centers, they empower skilled professionals.

• The company sold 3,992 firewalls, ensuring robust cybersecurity for its clients.

• The company’s solutions protect a grand total of 59,503 devices with endpoint prevention tools, and it monitors 238,635 devices with advanced detection and response tools, in addition to safeguarding 15,681 users with cyber hygiene tools.

• With 18 years in the cybersecurity sector, the company is among the industry's oldest companies, recognized as a trusted security advisors.

• The company has a consistent annual growth in gross profit (40%) and turnover (46%) over the last 16 years solidifying its position as a reliable and financially stable entity in the market. Furthermore, its commitment to delivering essential value sets it apart, enabling it to consistently achieve significantly higher margins (28-38%) compared to traditional IT distributors (typically <10%).

• The current business primarily focuses on Hungary (generating 63% of its income). With strategic investments, there is substantial potential for expanding its successful sales strategy into other countries.

Niche

In the realm of cybersecurity distribution, the company's landscape remains sparsely populated with active competitors. Despite this, the market is in the throes of consolidation, even as the demand for cybersecurity continues to surge, encompassing new market segments, including SMEs.

In the foreseeable future, the company envisions a landscape where trusted cybersecurity experts, with decades of experience and a robust portfolio of satisfied clients across various sectors, ascend to the role of the go-to destination for security. This evolution will set the company apart from traditional IT distributors.

As it diversifies its operations to include sales, training, and managed services, the company’s vision is to emerge as the premier trusted solution provider in the region, providing a solid foundation and cash flow for global expansion.

Customer Base

The company’s customer base consists of three main groups:

• 415 active reseller partners, who sell and integrate its solutions.

• 1000-2000 cybersecurity and network experts who have undergone its trainings, and participated in its workshops or conferences.

• <50 priority end customers who are directly purchasing from the company, as they need to be the closest source to the technology: ministries (of defense), armed forces, law enforcement, secret services, and governmental agencies.

As the entire cybersecurity market works with yearly subscription models, the company is organically growing its year-by-year revenue by renewing old customers’ licenses and expanding and upgrading its cybersecurity solutions.

In 2022, the company's annual recurring subscriptions reached an impressive $2.3 million, marking a remarkable 130% surge from the $1 million recorded in 2021. This milestone signifies its successful transition from a business model heavily reliant on one-time, capital-intensive projects—often involving large hardware deliveries—to an operational expenditure (opex) income model, predominantly centered around subscription renewals.

Traffic

The website traffic is not relevant to its business. Social media is certainly an area for growth, but this doesn’t have a direct, measurable effect on income.

Revenue Sources

The company collects three sources of revenue:

1. The vast majority of income is coming from distributing and reselling cybersecurity products. They buy from the vendor – typically as a sole distributor – and sell through a network of resellers and integrator companies.

2. The growing monthly revenue comes from managed security services and device loans.

3. The training and cyber range subscriptions provide some revenue, that it typically uses for marketing and event organization to increase its professional local presence.

Financials

In 2022, the company's revenue reached $6 million, and it is setting a target of $10 million for 2023. A significant contributor to this growth was the annual recurring revenue, which amounted to $2.3 million in 2022, marking an impressive 130% increase from the previous year.

The owner has no salary, but certain assets (like cars) are stored in the company.

Sales (USD)

2018 – 1.95M USD

2019 – 2.8M USD

2020 – 3.3M USD

2021 – 3.5M USD

2022 – 6M USD

2023 (YeTD) – 2M USD (Q1+Q2)

Profit/SDE (USD)

2018 – 522K USD

2019 – 817K USD

2020 – 888K USD

2021 – 1024K USD

2022 – 1527K USD

2023 (YTD) – 483K USD (Q1+Q2)

Operations

Most of the company’s operations are managed remotely, with just two office rentals. The company develops its own ERP / CRM management system with 1 dedicated FTE.

Team

The team consists of two types of employees:

• Full-time Employees for accounting and sales administration

• Subcontractors for sales and managing the partner network. Most of the subcontractors are paid on commission

Sales/Marketing

The business is built mostly on personal relationships and trusted cybersecurity products with an organically growing penetration. Most efforts are focused on meeting with peers in person: trade shows, conferences, workshops, and training.

The marketing budgets are often provided by its vendors, reducing the cost of participation in events.

Partners

There are no significant partners that the business depends on. It uses Akcenta for currency exchanges, and Microsoft for IT infrastructure and it works with some event organizers.

Main Expenses

The company’s main expense is the cost of the FTEs, practically insignificant compared to the income. Travel expenses have also been reduced a lot since COVID.

Work and Skills Required

The founder and sole owner of the company designed the company’s portfolio and made his vision for cybersecurity successful by advising hundreds of important customers. He often speaks at regional cybersecurity conferences and is generally well-known in the professional community.

The company offers two options for purchase

• Selling 100% of the company

  • New management and a new CEO should be appointed

  • The CEO stays on board for 1 year to oversee the transfer and help train employees

• Selling 80% of the company

  • The CEO stays on board as CTO and remains a minority owner, keeping 20%

  • The CEO manages the cybersecurity portfolio and the technologies, and solutions offered

  • He may also remain the “face of the company” on trade shows and PR events

Who is the ideal buyer for this business?

The Ideal strategic buyer would be someone who understands the importance of cybersecurity in a world that’s transforming into digital. By adopting the vision and the proven sales strategy for new markets, the company could be transformed into a global cybersecurity distributor and solution provider.

Investment required to start up new countries and territories is purely workforce cost, as 1-3 person teams are able to manage a territory. Every new, well-trained sales manager should be able to realize 200-500K gross profit per year.

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

The CEO will stay on board for 1 year to oversee the transfer and help train employees if the sale is 100%.

Valuation

Valuation is based on the yearly profit and equals the sum of the next 5 years of expected profits.

Keeping the last 16 years’ grand average of 40% yearly growth in gross profits, the company can forecast:

• 2022: 1527K USD (fact)

• 2023: 2140K (plan)

• 2024: 3M (first year of sale)

• 2025: 4.2M (second year of sale)

• 2026: 5.9M (third year of sale)

• 2027: 8.3M (fourth year of sale)

• 2028: 11.6M (fifth year of sale)

Total gross profit in 5 years: 33M USD
Company sell price: 15M USD for 100% or 10M USD for 80% (+ 6.6M USD from profit forecast for 20% minority ownership)

SEO/ASO Analysis:

Web

Authority Score: 24

Backlinks: 253

Referring Domains: 62

Ranking Keywords: 3

Percentage of Links that “Do Follow”: 77%

Expansion Opportunities for New Owner

The company's organic growth is evident, with costs already optimized and operations steadily improving through increasing automation each year. The primary focus now lies on expanding the customer base. This involves bringing in new sales managers, forging partnerships with fresh collaborators, and maintaining its successful formula. By strategically adding team members in key markets around the world, the company can expect to see a proportional increase in revenue.

Furthermore, untapped social media and PR opportunities represent a significant potential for drawing in more professionals and aligning them with the company's vision. These avenues will further the company's reach and impact.

Barriers to Entry

Security is a matter of trust and expertise. It is certainly not trivial to enter the market with a fresh company and unknown colleagues, especially not in Central and Eastern Europe where people are cautious and trust needs to be earned. 

The 18 years of expertise, successful, organically growing operations, and local trusted relationships are the solid foundation that cannot be replaced or restarted trivially.

Reason for Sale

The CEO founded the company as a single person, then expanded to 5 country offices with a team of trusted and well-trained employees.

The next logical step in the growth of the company should be run by a business-minded, growth-oriented CEO, who can combine the available assets and drive the company from 20 to 200 people.

The CEO however can stay in the business focusing on the technology and the deeper security details, or simply retire and focus on his family.

All Assets Included with Sale 

All the things that the company owns are included in the sale. 

1. Domains and all IP brand assets

2. Website and all website contents

3. All Customer information

4. All Partner Accounts

5. Employee contracts

6. Inventory or Unearned Revenue

7. All distribution contracts

8. Bank accounts

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About the Agent 

FIH.com is a Manhattan-based M&A advisory firm specializing in the sale of remotely-run successful digital companies (around the world) from $1M-100M in revenue, including apps, marketplaces, freemium + enterprise SaaS, ecommerce, affiliate/advertising groups, and more! We are proud to work with the very best entrepreneurs and investors, so if that’s you and you are in the market to acquire or sell a relevant business, then we encourage you to reach out for a complimentary consultation.