Technology & Digital Businesses · Buyer guide
Buying a Web Development & Software Agency business
Published · Reviewed by The Diligence Standard Team · Updated
a Web Development & Software Agency can look attractive on a summary P&L while the operating details underneath it change the cash flow, transferability and capital a buyer will actually own. Diligence should connect the reported earnings to the business-specific drivers that create them.
How the business works
Retainer/maintenance revenue, project margin, developer utilization, client concentration and founder sales drive value.
Risks to test
- Founder sales
- Key developer dependence
- Project overrun
- Client concentration
- Contractor/IP ownership
- Technology obsolescence
Evidence to request and reconcile
- Client/contracts
- Project margins
- Time/utilization
- Developer roster
- IP assignments
- Pipeline
Decision questions
- What revenue recurs after project completion?
- Who owns client relationships?
- Do projects hit budgets?
- Who owns code/IP?
- Which developers are critical?