What the business does
AVC Tech Services provides managed IT, managed security, Microsoft 365/cloud licensing, VoIP telephony, and managed print/copier services to small and mid-sized businesses in California's Inland Empire (Apple Valley), established in 2016.
3-Year Profit Trend
2023 SDE $243,289 (17.4% margin) on $1.40M revenue; 2024 SDE $373,744 (24.5%) on $1.53M; 2025 SDE $240,010 (20.6%) on $1.16M. Revenue has been declining since 2024 mainly due to loss of a large military print contract; TTM revenue further down to $780,646 with normalized EBITDA $197,418 (25.3% margin), but TTM excludes 8 months of the lost contract entirely.
Top Risks
- Loss of largest client: a $32,500/month military print contract (~28% of revenue) ended Dec 2025, with no guaranteed return, driving the big TTM revenue drop ($1.16M to $780,646/$650,646 excl. contract).
- Heavy owner dependence: both owners handle sales, account management, installs, and technical escalations (firewall/network); no #2 manager in place, though Sean may stay post-sale on negotiable terms.
- Revenue and reported net income are volatile year to year (2024 net income dipped to $7,291 on an accrual basis before add-backs, and TTM accrual P&L shows multiple monthly losses).
- Thin balance sheet: company carries essentially no fixed assets, minimal cash ($4,100) and an SBA loan payable, so a buyer gets little hard collateral and must fund working capital/equipment needs itself.
- Key vendor concentration: business model relies on a few single-source platforms and relationships (Pax8 for Microsoft licensing, Syncro MSP, Lexmark/Epson dealer status) — any disruption there could hurt margins or service delivery.
Owner Involvement
Anthony works ~40 hrs/week (CEO/CFO), Sean works considerably more (COO); no non-owner manager in place today, though Sean may stay on after transition.
Value Reasoning
No asking price has been set by the broker (IOI-based process), so valuation will be buyer-driven; using 3-year average SDE of ~$285,681, a typical IT services multiple of 2.5-3.5x SDE implies a value range of roughly $714,000-$1,000,000. Buyers should weight the 2025/TTM decline (lost military contract) heavily, as the business's true recurring run-rate is closer to the $650,646 adjusted TTM revenue and $197,418 normalized EBITDA rather than the stronger 2024 peak.
Questions for the Broker — What Each One Means
1. The lost military print contract
This was the company's single biggest customer, paying $32,500 every month, and it ended in December 2025. That is about 28% of what the company used to make in a year, gone. If it never comes back, the yearly cash flow the new owner takes home could be permanently lower than the 2023-2025 numbers suggest, since those years still included this contract for much of the time. The broker says it might return by the end of 2026, but there is no signed agreement.
The question to ask: Is there anything in writing from Lexmark, Epson, or the government that supports the contract coming back, and if not, can we base our price on the business without this contract?
2. What a manager will really cost
The sellers currently pay themselves a combined $230,151 to $439,891 a year in different years, but the add-back schedule only assumes it would cost $145,000 a year to replace both of them with a manager. Since both owners do sales, account management, and technical escalation work, one $145,000 hire may not be enough to replace everything they do, which would lower the real cash flow available to a new owner.
The question to ask: What specific day-to-day tasks would a new owner or hired manager need to perform that Anthony and Sean currently do personally, and is $145,000 realistic to cover all of it?
3. Vehicle and "car & truck" costs
The P&L shows the company added back vehicle lease and car/truck expenses as personal perks every year, including $43,474 in the most recent trailing twelve months alone, way higher than in 2023-2025. Two company-leased vehicles the owners use personally are being excluded from the sale, but it's worth confirming the jump is genuinely personal use and not a business cost like a field service vehicle.
The question to ask: Can you break out how much of the $43,474 in car and truck expense from the trailing twelve months relates to the vehicle used by the field service technician versus the owners' personal vehicles?
4. Recurring revenue reliability
96% of revenue is "recurring," meaning it's billed automatically every month under contract, which is good. But seat counts (the number of devices or users billed) are audited only once a quarter, and clients can't reduce a large number of seats until their 12-month contract ends. If several clients shrink their headcount or close, that recurring revenue could drop faster than it looks on paper.
The question to ask: Have any current clients indicated they plan to reduce staff size or cancel significantly in the next 12 months?
5. Month-to-month office lease
The office is rented month to month for just $1,000/month, with no long-term lease securing that rate. If the landlord raised the rent substantially or ended the lease, the new owner would need to find a new location and absorb moving costs, which isn't reflected anywhere in the profit numbers shown.
The question to ask: Has the landlord indicated any plans to raise the rent or not renew after a sale, and would they put a longer lease in writing for a new owner?
6. Cash basis versus accrual basis differences
The financials are shown on a "cash basis," meaning they count money when it's actually received or paid, not when it's earned or billed. On an accrual basis (counting money when earned), 2024 actually shows a loss of about $26,958, while the cash-basis version shows a small profit of $7,291 that year. This matters because the accrual numbers can reveal if the business was already struggling before the cash caught up.
The question to ask: Can you provide the accrual-basis profit and loss for each of the last three years so we can see the true timing of when revenue was earned, not just when cash came in?
How these answers affect the financial model
Start from the $197,418 normalized trailing-twelve-month cash flow, but recognize this already excludes most of the lost military contract. Subtract a realistic cost to replace what Anthony and Sean do (potentially more than the $145,000 assumed). Add back the real office rent cost only if it is expected to rise. Factor in a cash reserve for inventory (ink, toner, hardware) and for any seasonal swings in seat counts. Then compare the resulting annual cash flow to your loan and any seller financing payments: that ratio is called DSCR, or debt service coverage ratio. For example, $197,418 of cash flow divided by $130,000 of yearly loan payments equals about 1.52x, meaning there is $1.52 available for every $1 owed on the loan.
A simple way to explain this to your partners
"This IT services company looks solid on paper with 96% recurring revenue and strong margins, but its biggest customer, worth almost a third of past revenue, just walked away in December 2025, and we don't have certainty on whether it's coming back. We also need to nail down what it really costs to replace the two owners, since they do sales, management, and technical work, and we want to see the accrual-based numbers to make sure the cash-basis profit isn't hiding a weaker year underneath."
Post-Acquisition Hiring
- Operations/account manager to replace owner sales & account management duties: ~$145,000/year (per CIM's replacement cost assumption, may need to be higher)
- Consider a dedicated salesperson if growth pipeline (competitor displacement, government print) is to be pursued: ~$60,000-$80,000/year base + commission
Next Steps
1. Ask the broker (Zac Walter) for written confirmation or documentation on the status/likelihood of the military print contract returning, and request accrual-basis financials for all 3 years plus the current data room package.
2. Confirm with ownership the true cost and scope of replacing Anthony and Sean's combined sales, account management, and technical escalation duties - do not take the $145,000 replacement assumption at face value.
3. Verify the TTM "Car & Truck" expense spike ($43,474) and family member COGS compensation with underlying receipts/payroll records before accepting them as full add-backs.
4. Request a client-by-client aging and contract-renewal schedule to confirm the 96% recurring revenue and check for upcoming seat-count reductions.
5. Structure an opening IOI anchored around $700,000-$950,000 (roughly 2.5-3.5x normalized SDE of ~$197,000-$285,000), with a portion contingent/seller-financed and tied to Sean's post-close transition support.
6. Negotiate a 3-6 month transition period with Sean retained afterward in a defined role, and confirm the month-to-month lease terms directly with the landlord before closing.
Why It Fits This Buyer
A fantastic platform play: 96% recurring B2B revenue, no client over 5% concentration, a full-stack IT+security+VoIP+print bundle rivals rarely match, and real upside recovering the lost government contract. Structuring this as a no-money-out-of-pocket (zero buyer equity) creative deal: base price set at roughly 1x normalized TTM EBITDA (~$197,418), funded via bank/SBA financing plus a seller note, with an earnout to pay sellers additional consideration tied to performance (e.g., recovery of the lost military print contract and retained recurring revenue).