Nearshore Software Engineering Services Firm

$9.1M

Revenue

$1.6M

SDE

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Full Editorial Writeup

This is a 22-year-old custom software development and engineering services firm running a blended US and nearshore delivery model. The 93-person team is spread across the United States, Mexico, Colombia, and Argentina, offering custom software development, cloud architecture, AI-integrated engineering, and managed delivery teams. The labor arbitrage between US-based account leadership and Latin American engineering talent is the core economic engine here, and it is a model that has been validated repeatedly in the IT services space.

The client base skews toward mid-market, enterprise, and government organizations operating at scale across financial services, life sciences, real estate, and government verticals. That mix matters. Government and life sciences work tends to be sticky and budget-protected, while enterprise financial services accounts carry larger contract values but more cyclical sensitivity. At roughly $9.1M in revenue against a 93-person workforce, revenue per head sits near $98k, which is on the lower side for the space and suggests room to either raise rates or improve utilization.

Reported normalized EBITDA is $1.57M with a 3-year average of $2.05M, putting margins in the 17 to 22 percent range, healthy for a services firm. The owners describe a deliberately prepared transition with a mature, largely self-sufficient delivery engine, which is exactly what a buyer wants to hear but exactly what diligence needs to verify. The fact that EBITDA has declined from the 3-year average to the trailing figure is the single most important thread to pull.

Why we like it

Earnings quality is solid for a services firm, with $1.57M trailing EBITDA on $9.1M revenue and a stated 3-year normalized average of $2.05M. The 17 to 22 percent margin band is respectable for software services and the nearshore labor model in Mexico, Colombia, and Argentina is the structural reason those margins hold.
Durability comes from a 22-year operating history and a diversified vertical mix spanning financial services, life sciences, real estate, and government. Government and life sciences clients in particular tend to carry multi-year engagements and budget protection that smooths revenue through downturns.
The market tailwind is real. AI-integrated engineering and cloud architecture are exactly the capabilities enterprises are spending on right now, and a firm already positioned in those areas with delivery muscle can ride the demand wave rather than scramble to build it.
The operator advantage is a pre-built, self-sufficient delivery engine. A buyer with a sales motion or a larger services platform can bolt this on and immediately drive new logo growth without rebuilding the offshore bench, which is the hardest and slowest part to assemble from scratch.

How to improve it

Audit utilization and bill rates across the 93-person team in the first 90 days. At roughly $98k revenue per head, there is likely slack in either utilization or pricing, and even a 5 point utilization gain or modest rate increase drops straight to EBITDA given the fixed nearshore cost base.
Shift the revenue mix toward recurring managed delivery teams and away from project-based custom builds. Recurring managed services contracts smooth cash flow, raise the eventual exit multiple, and reduce the revenue cliff risk that plagues project shops.
Lean hard into the AI-integrated engineering positioning as a packaged offering with defined pricing. Productizing AI implementation services lets you sell into existing accounts at premium rates and creates a clear differentiator versus commodity nearshore competitors.
Pursue land-and-expand within the government and life sciences accounts. These are sticky, budget-protected verticals, and a deliberate account expansion playbook can grow wallet share without the cost of net-new client acquisition.
Tighten the sales engine, since the listing emphasizes delivery maturity but says nothing about a repeatable demand-generation function. Installing a disciplined outbound and partner-referral motion is the clearest path to reversing the EBITDA decline from the $2.05M average toward $1.57M trailing.
Reduce key-person and key-client concentration before it bites. Document delivery leadership succession in the Latin American offices and verify no single client drives an outsized share of revenue, then build redundancy where exposure is highest.
Benchmark and optimize the nearshore cost structure across the three countries. Currency and wage inflation differ materially between Mexico, Colombia, and Argentina, and actively shifting hiring toward the most cost-effective geography preserves the margin advantage.

Diligence notes

Explain the gap between the $2.05M 3-year average normalized EBITDA and the $1.57M figure. A 23 percent decline signals either lost accounts, margin compression, or rate pressure, and understanding which it is determines whether you are buying a stable asset or one in decline.
Pull a full client concentration and contract analysis. Confirm what share of the $9.1M comes from the top 3 to 5 accounts, whether revenue is project-based or recurring, contract terms, renewal history, and notice provisions, since services revenue can evaporate fast on project completion.
Scrutinize the workforce structure across all four countries. Verify employee versus contractor classification, the durability of nearshore staffing arrangements, compensation trends, and retention of senior delivery leads, because the delivery engine is the asset you are paying for.
Validate the normalization adjustments line by line. Owner add-backs, the new-venture distraction effect on current performance, and any one-time items all need scrutiny to confirm the true run-rate earnings a buyer would actually inherit.
Assess customer cyclicality given the financial services and real estate exposure. These verticals cut discretionary IT and consulting spend early in a downturn, so model what revenue and EBITDA look like if enterprise project budgets contract 20 to 30 percent.
Clarify the sales and business development capability transferring with the deal. If new client acquisition has been driven by the departing owners' relationships, the deliberate transition plan must be tested hard, because a self-sufficient delivery engine with no demand engine is a wasting asset.

Source

Originally listed on BizBuySell. View original listing →