Opportunities
Omaha Heating & Air
Sold
Established and well-regarded business with recurring monthly income!
Specifications
An established and well-respected heating and air conditioning business is for sale in Omaha, Nebraska. The owner is retiring and is looking for a buyer to usher his business into its next chapter. With a well-trained and tenured staff in place, this company has built a loyal and diverse client base by providing honest, high-quality service and workmanship.
Services include installation, repair, and replacement of heating and air systems. This includes furnaces, air conditioners, humidifiers, geothermal systems, commercial kitchen ventilation, and air cleaners. Working with a diversified customer base is this company’s specialty. Long-term clients include residential home builders and home owners, commercial landlords, as well as large and small businesses. Able to address all types of issues with nearly any system in place, this team has proven itself to be consistently knowledgeable, responsive, and reliable. In addition to daily operating hours, this company offers 24-hour emergency services.
This business is currently managed by an owner/operator. An office manager is in place and has 20 years of experience with the company. Mechanics are well-trained and have been with the company for multiple years. Though operating with income over $1MM annually, room for growth can be found in engaging with customers online, advertising, and increasing annual maintenance contracts.
Business Highlights
- Year Established: 1983
- Location: Omaha, NE
- Service Area: Nebraska: 30-mile radius from Omaha
- Clients: Homeowners, builders, businesses, commercial landlords
- Services: Installation, repair, and replacement for residential customers, residential new construction, commercial kitchens, commercial businesses
- Lease: 3,000 sq. ft.: Showroom, front office (2), lunch room with kitchenette, workshop
- Reason for Selling: Retirement
- Employees: 5: Mechanics (4), Office Manager (1)
- Hours: M-F 8:30-4:00 with 24-hour emergency service
- Seller Training Period: Flexible 90 days transition
- Growth Opportunities: Engage online, advertise, expand team to increase capacity, increase annual maintenance contracts
- Current Owner’s Responsibilities: Owner/operator
Financial Highlights
- List Price: $673,000
- Gross Sales:
- 2018: $1,295,008 Annualized
- 2017: $1,206,072
- 2016: $1,193,364
- 2015: $1,147,967
- Cash Flow:
- 2018: $203,186 Annualized
- 2017: $207,107
- 2016: $149,916
- 2015: $140,901
- Assets Included in Purchase*
- Equipment: $51,000: Tools, shop equipment, ladders, furniture and fixtures, five vehicles
- Inventory: $15,000: Service parts
- A/R: $100,000 as of June 2018
- Intangible Assets: Excellent long-term customer relationships, well-trained staff, positive reputation for trustworthiness and high-quality workmanship
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Jan-June | Tax Return | Tax Return | Tax Return | Tax Return | Notes |
| 2018 | 2017 | 2016 | 2015 | 2014 | ||
| GROSS SALES | $647,504 | $1,206,072 | $1,193,364 | $1,147,967 | $1,002,335 | |
| Annualized | $1,295,008 | |||||
| Net Income Shown on Financial Statement | $100,217 | $41,935 | $11,550 | $7,343 | $31,781 | |
| ADDBACKS | ||||||
| Compensation to Owner | $0 | $97,558 | $93,120 | $98,202 | $65,000 | |
| 11% Tax on total W2 Salaries | $0 | $10,731 | $10,243 | $10,802 | $7,150 | |
| Interest | $0 | $1,374 | $1,021 | $1,510 | $3,625 | PErsonal Owner's Expense |
| Pension/Profit Share for Owner | $0 | $24,389 | $23,280 | $9,750 | $9,750 | Non-Cash Item |
| Meals & Entertainment | $116 | $775 | $669 | $1,719 | $608 | |
| Non-Business Telephone | $1,260 | $2,520 | $2,520 | $2,520 | $2,520 | $210/month for 3 personal lines |
| Depreciation | $0 | $27,825 | $7,513 | $9,055 | $22,583 | |
| TOTAL ADDBACKS | $1,376 | $165,172 | $138,366 | $133,558 | $111,236 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $101,593 | $207,107 | $149,916 | $140,901 | $143,017 | |
| Annualized | $101,593 | |||||
| Profit Margin | 15.69 % | 17.17 % | 12.56 % | 12.27 % | 14.27 % |
- Increasing sales year-over-year!
Typical Clients
- Homeowners
- Builders
- Businesses
- Commercial landlords
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Installation, repair, and replacement
- Heating systems
- Air systems
- Geothermal systems
- Air cleaners
- Kitchen ventilation
- For residential customers, residential new construction, commercial kitchens, commercial businesses
Employees
Employees: 5
- Mechanics (4)
- Mechanics are added or subtracted based on company workload and/or season
- Office Manager
Growth Opportunities
- Engage online
- Advertise
- Expand team to increase capacity
- Increase annual maintenance contracts
Valuation Details
The Firm Business Brokerage used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2017 cash flow was used with a prescribed multiple is 3.25. With this information, the computation is as follows:
$207,107 x 3.25 = $673,098
The fair market value found above positions the business list price at $673,000.
Funding Example
Purchase Price: $673,000
12.5% Buyer Down Payment: $84,125
12.5% Seller Financing: $84,125
75% Bank Loan: $504,750
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,568.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $6,633.
After business expenses and loan payments, a buyer with a 12.5% down payment of $84,125 would retain a profit of $108,689, which results in a 129% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $673,000 with the terms listed above, the coverage ratio is 2.1.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857