Private company analysis with historicals, projections, ratio analysis, DSCR, and covenant checks
Software Development & IT Services
Recommendation: APPROVE $2.5M revolving credit facility
Rationale: TechFlow demonstrates strong operational metrics with EBITDA margins of 18-22%, healthy DSCR of 2.1x, and robust cash generation. The company has diversified revenue streams, strong management team, and conservative leverage profile. Key risks include customer concentration and competitive market pressures, but covenant headroom provides adequate protection.
TechFlow Solutions Inc. is a mid-market software development company specializing in enterprise applications and cloud migration services. Founded in 2018, the company has grown from $2M to $12M in revenue over 5 years, serving clients across healthcare, finance, and manufacturing sectors.
Management: CEO Sarah Chen (15 years industry experience), CTO Michael Rodriguez (former Microsoft engineer), CFO Jennifer Park (CPA, Big 4 background)
Business Model: 60% recurring SaaS revenue, 30% project-based development, 10% consulting services
| Metric | 2021 | 2022 | 2023 | 2024E |
|---|---|---|---|---|
| Revenue | $8.2M | $9.8M | $11.4M | $12.5M |
| EBITDA | $1.4M | $1.8M | $2.1M | $2.3M |
| EBITDA Margin | 17.1% | 18.4% | 18.4% | 18.4% |
| Net Income | $0.8M | $1.1M | $1.3M | $1.4M |
| Total Debt | $3.2M | $2.8M | $2.5M | $2.5M |
| Cash | $0.6M | $0.9M | $1.1M | $1.2M |
| Metric | 2025E | 2026E | 2027E |
|---|---|---|---|
| Revenue | $13.8M | $15.2M | $16.7M |
| EBITDA | $2.6M | $2.9M | $3.2M |
| EBITDA Margin | 18.8% | 19.1% | 19.2% |
| Net Income | $1.6M | $1.8M | $2.0M |
| FCF | $1.8M | $2.1M | $2.3M |
Key Assumptions: 10-12% annual revenue growth, margin expansion from operational efficiency, minimal capex requirements
60% of revenue from SaaS subscriptions provides predictable cash flow and reduces customer churn risk
Experienced leadership with proven track record in software development and financial management
Serves multiple industries reducing sector concentration risk, though top customer represents 35% of revenue
Low debt levels with strong covenant headroom provide flexibility for growth initiatives
Top customer represents 35% of revenue, creating significant dependency risk if relationship deteriorates
Intense competition from larger software companies and offshore development firms could pressure margins
Rapid technology changes require continuous R&D investment to maintain competitive position
Project-based revenue (30%) may be vulnerable to economic downturns affecting client IT spending
APPROVE $2.5M revolving credit facility with the following terms:
Rationale: Strong operational metrics, adequate covenant headroom, and experienced management team support approval. Monitor customer concentration risk and maintain regular covenant testing.