The business: Are you tired of watching all those fast-growth entrepreneurial models pass you by? Then perhaps it's time for you to test-drive this 30-year-old software developer. Its market niche -- corporations and municipal agencies with large fleets of vehicles to maintain -- has helped it capture a blue-chip list of more than 1,500 customers nationwide. Fleet owners ante up somewhere between $5,000 and $20,000 for licensing fees (plus additional money for yearly support and training) to use this company's cost-control software. The product is proprietary and relatively low priced compared with the competition's. The company has successfully switched gears from developing software for IBM mainframes to creating a Web-based ASP model. And with a nationwide customer base, this business could be relocated anywhere. However, the company's current staff of 12 (including 5 customer-service/training representatives and 3 full-time sales professionals) are already on-site and up to speed on the growth strategy.

Price: $5.8 million (with possible financing by the owners)

Outlook: There's no doubt that a new owner could put the pedal to the metal. Fleet-maintenance costs can run as high as 15% to 25% of revenues, which could fuel a lot of motivation among potential customers. The current owner woos new business through referrals, trade shows, advertising, and, increasingly, the company's Web site. That's a pretty effective combination, and if a new buyer is willing to increase the size of the marketing staff, growth could accelerate even more.

Price rationale: Did the asking price send you into sticker shock? It should, since the only problem with this cost-control-software manufacturer is that its cost of acquisition is way too high -- a big problem in a business environment that has started responding to caution lights from the stock market and the Federal Reserve. Computer-software companies are selling for about 57% of annual revenues; that would suggest a low-end price of around $900,000 for this business. Given the company's consistently high level of profitability and top-quality customer list, a buyer might be able to justify doubling or even tripling that price.

Pros: At the right price, this company has the product, profits, and market potential to cruise in the fast lane.

Cons: As with any high-end software product, you'll end up with a lemon if you don't come up with new customers to pay those hefty front-end fees.

Gross Revenues Recast Earnings*
1998 $1,052,000 $446,000
1999 $1,404,000 $643,000
2000** $1,575,000 $750,000

*Before interest, taxes, depreciation, and owners' compensation.

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Michael Magee at Western Acquisition & Merger Corp., 303-617-0037.

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