Monday, December 20, 2021

Acquisition Opportunity

Progress Software Consulting Firm w/ Proprietary RAD Framework




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2020 Revenue: $1.3M                 2020 EBITDA $337K

       Superior Reputation: Company has been providing Progress Software development and consulting services for over 20 years and have a loyal local account base. Their top 5 customers have an average 15 year relationship.

       Leverages a Competitive Advantage: Company has developed a proprietary web-based Rapid Application Development (RAD) framework, that is utilized in the modernization of client legacy systems in addition to new application development. Company uses this competitive advantage to win contracts over other consulting firms.

       Potential for Geographic Expansion: As a smaller firm, they have primarily limited their business to the large and medium sized clients in their local area. They do not have sales reps and do limited marketing. A larger firm could leverage their expertise to capture business in additional Progress Software stronghold locations.

       Great Opportunity to Monetize Company's Software: Company currently does not sell its RAD Platform Software. It enables long-term Progress Software end-users to retain their proprietary databases and processes while modernizing business applications to remain competitive with their software solutions.  It protects clients' investments in Progress Software while providing a modern user interface. The RAD Platform Software also can be used by companies seeking to have new web-based business applications designed, developed and implemented.

       Long-Term Skilled Employee Base: Company's key engineering personnel average over 15 years of company experience. They also employ a few highly experienced sub-contractors. Clients value the experience and high level of enterprise support.

       Significant Growth Potential: Company's top consulting business competitors either do not offer a RAD Platform solution or their solution requires a major retooling of their clients' legacy environments. This powerful RAD Platform could be both used to improve the performance of a larger company's consulting practice and it could be offered as licensed software for current Progress Software OpenEdge users. 

The Company has successfully supported Progress Software products for over 2 decades. Like so many smaller IT consulting firms, they limit their geographic reach to their local market. Also like many other similar firms, they develop software tools that improve the functionality of the main product. They leverage that to a small extent by using it to win consulting engagements.

After years of product use and product enhancements, they recognize the value of their supporting software and want to monetize their intellectual property. However, they lack the sales and marketing resources to capitalize on the potential of their products, and their strong and loyal customer base. 

Their software has been used for several years in major client engagements. It is battle tested technology and the "technology risk" for a potential acquirer will be minimal. It offers huge benefits to customers who have significant investments in their Progress Software Systems, but need to modernize them, deliver them on the Web, and greatly enhance the user interface

Dave Kauppi is a Merger and Acquisition Advisor and President of MidMarket Capital, providing business broker and investment banking services to owners in the sale of information technology, software, and other technology based companies. Dave is also the editor of the Exit Strategist Newsletter and author of the Book Selling your Software Company - An Insider's Guide to Achieving Strategic Value

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