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This is a federal IT consulting and software development firm operating fully virtual out of Rockville, Maryland. The core business is placing cleared technical personnel with U.S. government agencies through multi-year subcontracting arrangements with large prime contractors. Revenue is 100% contracted and recurring, billed weekly, with zero project-based or transactional work. That structure matters: it means the revenue is essentially a labor-arbitrage annuity tied to long-cycle federal budgets rather than lumpy project wins.
The standout asset here is an active Top Secret facility clearance held at the corporate entity level. That credential is genuinely hard to replicate, takes years to obtain, and transfers with the business in a stock purchase. It is the kind of moat that turns a commodity staffing shop into a defensible position, because a new entrant cannot simply spin one up to compete for the same contracts.
With $3.38M in revenue and $1.2M in normalized TTM EBITDA, the business runs at roughly a 36% EBITDA margin, which is exceptional for staffing and signals high-value cleared billets rather than commodity placement. Revenue has compounded at 13.8% since 2022 with no dedicated sales function, meaning the growth came organically off relationships and clearance value. The owner is exiting to pursue other interests, not under duress, and is willing to stay on billable to bridge continuity.
Why we like it
- Earnings quality is unusually clean for a services business. Revenue is 100% contracted, recurring, and billed weekly with no project or transactional income, so the $1.2M EBITDA is a high-visibility cash stream rather than a backward-looking average. A 36% EBITDA margin on staffing revenue tells you these are premium cleared billets, not commodity bodies.
- The Top Secret facility clearance is a real moat. It is held at the corporate-entity level, takes years and significant cost to obtain, and transfers in a stock purchase. This is the single biggest reason a strategic buyer would pay up, because it is a gate to federal contracts that competitors cannot easily clear.
- Federal IT spending is structurally durable and counter-cyclical. Cleared technical work tied to defense and intelligence agencies does not get cut first in a downturn, and multi-year subcontracts with primes insulate this firm from short-term budget noise. That makes the cash flow defensible across economic cycles.
- There is obvious operator upside left on the table. The business grew 13.8% CAGR since 2022 with literally no dedicated sales function, which means an owner who adds even modest business development could accelerate growth meaningfully. The asset is underexploited, which is exactly what you want to buy.
How to improve it
- Stand up a dedicated business development function. The company has compounded at 13.8% with zero sales effort, so even one experienced federal BD hire calling on existing primes and adjacent agencies could materially expand the contract base within the first year.
- Deepen relationships with the prime contractors to move up the value chain. Today the firm is a subcontractor; pursuing teaming arrangements or small-business set-aside prime positions could capture higher margin and reduce dependence on any single prime relationship.
- Leverage the Top Secret facility clearance as a growth lever, not just a credential. Use it to bid on contracts and task orders that require cleared facilities, which immediately disqualifies a large share of competitors and justifies premium billing rates.
- Build a cleared talent pipeline to reduce time-to-fill on new billets. The constraint on growth in cleared staffing is sourcing people who already hold clearances, so investing in a recruiting bench and referral program directly converts into billable headcount.
- Diversify the agency mix to reduce concentration risk. If revenue is heavily tied to one or two prime contracts or agencies, deliberately winning placements across additional agencies de-risks the cash flow and increases the eventual exit multiple.
- Formalize and document the clearance and contract renewal processes. Since the value hinges on the corporate clearance and multi-year subcontracts, tightening compliance, FSO procedures, and renewal tracking protects the core asset and makes the business more institutional and sellable.
Diligence notes
- Verify the customer and prime concentration. With only $3.38M in revenue, the entire EBITDA could hinge on one or two prime relationships, so map every contract, its remaining term, renewal history, and what share of revenue each represents. A single non-renewal could cut earnings in half.
- Confirm the facility clearance transfers cleanly in a stock purchase and survives a change of ownership. Government clearances require DCSA notification and review on a change of control, so validate the process, timeline, and any risk that the clearance lapses or requires re-adjudication post-close.
- Scrutinize the contract structure and remaining periods of performance. Federal subcontracts often have option years that the prime or agency can decline, so quantify how much of the contracted revenue is firm versus optional and what the realistic renewal probability is.
- Pressure-test the owner transition and key-person risk. The owner is willing to stay billable, but you need to know whether his individual relationships and clearance drive the contracts, and how the team's retention holds up after a sale given staff are also cleared and portable.
- Normalize the EBITDA and confirm the add-backs. The $1.2M is described as normalized TTM, so reconcile it to tax returns and bank statements, and understand what the owner's billable contribution adds versus what walks out the door at close.
Source
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