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Architecture Firm for Hospitality & High-End Residential – 95% Recurring Clients

With a 37% profit margin!

CASH FLOW
$1,189,111

Specifications

  • Price
    $5,300,000

  • Revenue
    $3,393,012

  • Cash Flow
    $1,189,111

  • Location
    Ontario, Canada

  • Service Area
    Primarily Greater Toronto Area

  • Employees
    28: 14 staff, including 2 registered architects, 10 architectural technologists, 1 CFO/Personal Assistant, and 1 PT secretary

  • Profit Margin
    37%

  • Reason for Sale
    Retirement planning

  • Intangible Assets
    Excellent reputation in the region, strong recurring client base (95%)

With a profit margin of 37% and a 95% recurring client base, this niche architecture firm is well-established in the Greater Toronto Area. The firm has $10.3M in their pipeline with over 40 different clients over the next 3 years.  Their highly experienced team works out of a 7,500 sq. ft. leased space and includes 1 CFO, plus 2 registered architects on staff and 10 architectural technologists, all exceptionally skilled in the technical side of the full design process. Their projects range in size from small boutique hotels to grand golf course clubhouses throughout Canada, each one customized to fit their clients’ vision. The residential work includes high-end custom estate type homes up to $40M in value. The owners are willing to stay on for 2 to 3 years to assist in the transition and will finance or roll equity of 20% as a sign of faith and vested interest.

 

The firm is renowned for their work at private public clubhouses and boutique hotels. Their comprehensive services include conceptual and schematic design, design development and construction documentation, permits and approvals, contractor bidding and/or negotiating, and construction contract administration. They have fixed fees for their clients, which helps bring in a tremendous number of commercial projects. One owner does large-scale project management and financials, while the other does small-scale project management. Both are accounted for in the cash flow analysis.

 

Priced at $5,300,000, growth potential is substantial. This business has seen steady growth in sales and profitability in the past 4 years; increasing marketing and promotional materials, focusing on high-end small boutique hotels throughout Canada, and expanding current client relationships would certainly lead to continued growth. The company’s owner and 2 on staff are members of the Ontario Association of Architects, and the owner holds licenses with British Columbia and Nova Scotia, as well as NCARB licensing in New York and Arizona.

Business Highlights

  • Year Established: 1980
  • Location: Ontario, Canada
  • Services: Full-service architectural and interior design for golf courses across Canada, hospitality, multi-family, commercial and boutique hotels 
  • Clients: Multi-unit residential, commercial, & golf courses across Canada, as well as a large number of corporate clients
  • Lease: 7,500 sq. ft. space (part of a 15,000 sq. ft. building)
  • Reason for Selling: Retirement planning
  • Personnel: 28: 14 staff, including 2 registered architects, 10 architectural technologists, 1 CFO/Personal Assistant, and 1 PT secretary
  • Seller Training Period: 2-3 years
  • Growth Opportunities: Increase marketing/promotional efforts, focus on high-end small boutique hotels, expand current client relationships
  • Current Owners' Responsibilities: Owner 1: Large-scale project management, financials; Owner 2: Small-scale project management. Both owners are accounted for in the cash flow analysis

Financial Highlights

  • List Price: $5,300,000 CAD

  • The business has seen steady growth in sales and profitability in the last 4 years
  • 3-year average cash Flow: $1,413,003

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
Oct-Dec 2020 (1 Fiscal Quarter)
P&L Statement
October 2019-September 2020
P&L StatementP&L StatementP&L StatementP&L StatementNotes
202120202019201820172016
GROSS SALES$1,138,051$3,393,012$4,103,743$3,787,453$3,820,702$2,998,211
Annualized$4,552,204
Net Income Shown on Financial Statement$280,370$431,105$486,152$480,273$481,422$479,932
ADDBACKS
Amortization$2,959$19,425$15,876$13,041$16,726$9,418
Travel & Vehicle$7,279$31,466$68,746$61,532$29,819$46,508100% Personal
Management Salary$127,273$927,115$1,310,806$1,002,292$1,228,735$720,777
Retain/Replace$-55,000$-220,000$-220,000$-220,000$-220,000$-220,0002 owners (110k each)
Donations$0$0$0$0$0$0
TOTAL ADDBACKS$82,511$758,006$1,175,428$856,865$1,055,280$556,703
Seller's Cash Flow = Total Addbacks + Net Income$362,881$1,189,111$1,661,580$1,337,138$1,536,702$1,036,635
Annualized
Profit Margin31.89 %35.05 %40.49 %35.30 %40.22 %34.58 %
  • Profit Margin 2020: 37%
  • Fiscal Year runs October 1 - September 30
  • Gross sales for Oct-Dec 2020 are over $1.1M, annualizing 2021 to be their most profitable year.

Clients

  • Hotels, Bars, Spas, and Golf Courses
  • Clubhouses
  • Homeowners
    • Few select residential (homes valued between 2 and 15 million)
  • Multi-unit residential

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Conceptual & schematic design
    • Ex: hotels on a lake, condo towers, a private hockey arena, an airplane hanger
  • Design development & construction documentation
  • Permits & approvals
  • Contractor bidding and/or negotiating
  • Construction contract administration
  • Fees are higher than competition, but fair

Personnel

  • 2 owners
    • Owner 1: Large-scale project management, financial/promotional management
    • Owner 2: Single-family residential/small scale project management
  • 2 Registered Architects
  • 1 CFO/Personal Assistant
  • 10 Architectural Technologists
  • 1 PT Secretary

Growth Opportunities

  • Increase marketing/promotional efforts
  • Expand on current client relationships
  • Focus on high-end small boutique hotels throughout Canada

Valuation Details

Funding Example

Purchase Price:

$5,300,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
3-year average cash flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
3-year average cash flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.