One of the most provocative of the sale of health information technology is providing an assessment of business. Occasionally Assessments on the open market (translation – a completed transaction) to defy all logic. In other segments of the industry there are some pretty practical rules for the practice of metric evaluation. In an industry may be 1 income of X, another that would be 7.5 X EBITDA.Since is critical to our business help our customers to health information technology to raise their selling price of business, I took into account the considerable. Why are some of these evaluations of the software so high? It is due to the power of a profit leverage technology. A simple example is what is Microsoft 's incremental cost to produce a copy of the following professional? It is probably $ 1.20 for three CD 'if 80 cents per pack. Let 's say that the cost of is $ 400. The gross margin is north of 99%. That does not happen in manufacturing or services or retail or most other industries. One problem in the sale of small health technology is that it does not have any brand, distribution, or samples leverage that big companies have. Thus, by itself, can not generate this power of leverage a profit. The company bought, however, does not want the small seller offsetting the results of acquisition have dell'alberino that directly attributable to buyers' market presence of s. This is what we refer to as the split assessment. What we try to do is to help the buyer to justify paying a price much higher than un'pre-acquisition evaluation of the target. That is, we want to achieve the strategic value for our vendor. Below are the factors we use in our analysis: 1. Costs so that the buyer write the code inside – many years ago, Barry Boehm, in his book, the economy of technology programming, developed a model of constructive cost for the projection of programming costs for the machine code writing. He called the model COCOMO. It was quite detailed and complex, but I boiled it down and I facilitated for our purposes. We present the advantage of evaluating the "projects" in a retrospective already know why the number of lines of code that contain our clients' products s. In general has projected that requires 3.6 months of the person to write ten hundred slocate (lines of source code). So if esaminaste a Software Engineer $ 70,000 increased the compensation packages of fully loaded who writes a program with 15,000 slocate, your calculation is as follows – 15 x 3.6 = 54 months of the person X $ 5800 a month = $ 313,200 divided by 15,000 = $ 20.88/SLOC . Before that types with 1,000,000 one million lines of code get too emotional about your business worth $ 20.88 million, there are several warnings. Unfortunately, the market does not care about and not pay what it cost to build your product. Secondly, these information are intended to help them understand what it might cost to the buyer to develop it internally to begin its own configuration against dell'affare analysis. Thirdly, we must apply the discounts to this analysis if the software is old code to the estate of the three generations, for example. In that case, is discounted by 90%. You are no longer a sale of technology with the power of a high profit leverage. Essentially are buying your customer base and assessment is not what excites. However, if your application is a brand that has legs, start your yacht graduated according to the measure. Examples of this could be a fraud shooting, a Pal payment, or Internet telephony. The second platform of high value would be where your "technology software; frogs" Jump, a popular inheritance. An example of this is when we sold a company that had completely rewritten the platform of their inheritance in Microsoft. Network. Jumping frogged the dominant player in that space that was supporting the solutions of the second generation of many. Our client has become in un'aquisizione strategic coercive. The year round fast and I feel that the buyer is selling one of these $ 100,000 systems a week. Now that 'power of a lever s! 2. Most buyers would write the code themselves, but suggest that analyze the cost of their time to market of late. Credilo, with the first advantage of the engine by customer defections, worse, or competitor, there is now a very real cost of not having your product. We could convince a buyer that could justify our seller 'the entire purchase price of s based on the number of customer defections that their acquisition would have avoided. While it was established, the buyer has made a huge install base and the acquisitions front was making multiple six disparate software platforms to carry essentially the same functionality. This was very expensive and have carried out past those costs to their disappointment install the base. The buyer was promised updates for several years, but nothing was transported. Customers were starting to sign on with their main competitor. Our pass to the buyer was to make this acquisition demonstrates to your customer base that actually been providing upgrade path and gives notice of withdrawal of support for 4 or 5 other platforms. The acquisition was completed and, even if their clients were contemplating going immediately have not updated, not even defect. Apparently the devil that you know better than the devil you don 't in the world of information technology.3 health. Another arrow in our assessment that determines the quiver for our sellers is we riespone the historical financials using the power of assessment to make. We had a client who was a small company of information technology in health which had developed a fine piece of software which compared favorably to a big company 'publicly trade; solution s. Our product has had the same functionality, ease of use and open systems platform, but there was a very important difference. The end-user customer 's perception of risk was very small with the largest information technology company that could be "from the market tomorrow." We could literally double the financial performance of our client on paper and submit a coercive to the general debate of the buyer that the economy would have been available to him immediately dell'alberino acquisition. Certainly that was not GAP says, but it was effective as a tool to determine the transaction value.4. The Financials are important so we have to recognize this feature of the assessment of the buyer as well. Gradica generally build in a baseline (before we start to add strategic components of value) of a contractually income of Appeal of 2 X during the current year. Thus, for example, if the company has contracts for monthly maintenance of $ 100,000 times 12 months = $ 1.2 million x 2 = $ 2.4 million as part of the value of the baseline. Another component that we add is for all contracts that extend beyond one year. We estimate the gross product during the years of the contract settled more than a year and give it a multiple of 5 X on that and the discount to present value. Let 's use of an example where they had 4 years remains on a contract for services and 3 years last year was $ 200,000 in income with the gross income of about 50%. Request the tree final years of annual gross income of $ 100,000 and net present value it at a discount rate of 5% resulting in $ 265,616. This would add to the income of Appeal earlier in the year 1 of 2 X from above. Again, this financial analysis is to establish a base line before stacked on the strategic value components.5. We try to assign values for various goods that the seller is providing to the buyer. Don 't neglect the strategic value of the securities of clients first. Those customers are transformed into a platform for buyers' full range of product s acquisition that is sold in a dell'alberino "account." Installed; It is easier to sell added applications and products in a current customer that is to open this new customer. These customers may have strategic value to a huge buyer.6. Finally, we use a standard cost of customer acquisition to determine the value according to a potential buyer. Let 's say that your sales person at 100% of the share earned salary and commissions lle total of $ 125,000 and sells 5 net new customers. That would mean that your cost of customer acquisition low per customer was $ 25,000. Add the overhead costs of the holding of a20% to 85 customers, for example, and the value of using this method would be $ 2.550.000.7. The final component of our assessment is what we call the defensive factor. This is very real in the arena of health information technology. What is the value of a great company to prevent its competitor to buy your technology and improve their competitive position in the market. One of our clients have had results database and nurse providing the staff of the software. The owner was a renowned expert in this field and had industry credibility. This was a small add on two at the big industry players' set of integrated applications of the hospital. This module was seen as providing the slight advantage of the features the company that could integrate with their core systems. The selling price for one of these systems software to a major chain, the hospital was often more than $ 50 million. The value paid for our customer was resolute, not the financial performance of our client, but could provide the competitive acquisition dell'alberino. Our client has done very well on its sale of the company. After reading this you can say to you, on, this is a little far to go. These components have real value, but that value is open to wide interpretation by the market. We are trying to assign a metric to a set of components very subjective. The buyers are cunning and experienced in M & A process and quite frank, try to divert these artistic methods to start on their financial expenditure. The best point that the power of leverage we have is that those buyers know that we are presenting the same analysis to
Dave Kauppi
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