I am seeking information on EBITDA multiples for VARs with vast majority one time based revenue (90%+ one time revenue) vs VARs with a mixed revenue of one time product sales & reocurring maintenance contracts ( 50% one time revenue, 50% reocurring from multiyear maintenance contracts).
I've seen many multiple data points for MSPs with high % of reocurring revenue, but I have not found anything for firms that are a mix of VAR & MSP, or just pureplay VARs. Thank you!
Multiples for VARs: 100% one time revenue vs 50% one time/ 50% reocurring
by a searcher from Northwestern University - Kellogg School of Management
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MSP income should have 25% to 40% margins with almost all of it being monthly recurring billing servicing contracts and overall very steady cashflow.
VAR income for products should have minimum 10% margin, preferably 25% or higher, with seasonal ebbs and flows, (e.g. surge in Dec as companies finish their budgets end of year, dead in January, surge in Feb as new budget becomes available and they catch up on whatever was held back from January etc). Services should be closer to 40% margins but inconsistent cash flow. All this can vary wildly if there's a specific industry focus though. A very broad rule of thumb that can be applied for VARs that focus on one-time projects is that the gross(!) revenue per project tends to be 50/50 products vs services.