2. Preparing Your Managed Services Business for Sale
Robert Scott

3. Factors that Influence Value
Revenue Quality
Customer Contracts
Employees
Real Estate
Intellectual Property
Risk Management

4. Revenue Quality
Recurring Monthly Revenue – what percentage of your revenues are recurring vs. non-recurring?
Concentration of Revenue – how concentrated is your revenue among one or more of your biggest accounts?
Credit Worthiness of Clients – what is the credit strength of your client base?
Vertical Concentration - what percentage of your revenue is derived from desirable verticals such as health care or financial services?

5. Customer Contracts
Assignment – are your contracts freely assignable when you sell or do you have to get permission from the client?
Term – what is the typical term of your contracts and how much RMR will buyer receive based on existing contracts after closing?
Termination – can your clients terminate for convenience or only for cause?
Renewals – how likely is it that your clients will renew their contracts with buyer after current term expires?
Collection Risk – how likely is it that all clients will pay promptly after the close?
Claims Risk – how likely is it that customers will assert claims against buyer after the close?

6. Employees
Retention Agreements – do you have retention agreements with key employees?
Non-Compete – do your contracts with employees contain non-compete provisions?
Non-Solicitation – do your contracts with employees contain non-solicitation provisions?
Flexibility – will the buyer have flexibility to make staffing changes after the close?
Claims Risk – what is the risk of an employee claim against the company after the close?

7. Real Estate
Rates – how do your rental rates compare to current market rates?
Term – what is the remaining term on your lease?
Assignment – is the lease freely assignable?
Landlord – what is the quality of service provided by the landlord?

8. Intellectual Property
Trademarks – do you own the marks that are used in the business?
Copyrights – have you obtained copyright protection for your software, training, and other documentation?
Trade Secrets – have you done an appropriate job of keeping your secret sauce secret?
Contracts – do your contracts with customers, employees, vendors, and partners protect your intellectual property?

9. Risk Management
General Liability – do you have adequate insurance to protect against claims arising prior to the closing with a tail to cover claims asserted after closing?
Professional Liability – do you have appropriate coverage for errors and omissions claims asserted by customers?
Employee Practices Liability – do you have appropriate coverage for claims that may be asserted by customers after closing?
Vendor Claims – have you taken the steps necessary to avoid claims by third-parties such as compliance with contracts and licenses?

10. QUESTIONS?