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Opportunities

Architecture, Interior Design & Landscape Architecture

78 employees including owners, who will stay on under new ownership!

CASH FLOW
$2,935,924

Specifications

  • Price
    $11,500,000

  • Revenue
    $16,451,782

  • Cash Flow
    $2,935,924

  • Account Receivable
    $4,500,000

  • Profit Margin
    18%

  • Employees
    78 employees including owners, who want to stay on under new ownership

  • Intangible Assets
    Strong client base through website and social media advertising & reviews

  • Location
    Pennsylvania

  • Service Area
    Pennsylvania, Delaware, New Jersey & Maryland

With nearly $16.5MM in sales in 2019, this firm has 78 employees including owners, who will stay on under new ownership! Specializing in architecture, interior design, and landscape architecture, their highly skilled team includes a full-time business director, full-time marketing director, and a full-time public relations and social media associate. All seven principals participate in generating business through networking. Their loyal client base is comprised of developers, contractors, and corporate end-users, as well as public and private institutions.  The firm utilizes their website, social media advertising, and signs located at construction sites to increase their clientele.

 

Serving regionally in Pennsylvania, Delaware, New Jersey, and Maryland, the team secures around 200 projects per year, with 75-80% recurring clients. Their services include architecture (75%), interior design (15%), and landscape architecture (5). The firm is known for providing top-notch architecture and design services in the area for 47 years. 

 

There is immense growth potential for this company. A new owner could expand market share in healthcare and senior living. Opening an office in Pittsburgh or otherwise expanding the market into middle or western Pennsylvania is a growth opportunity as well. 

Business Highlights

  • Year Established: 1973
  • Location: Multi-Location in Pennyslvania
  • Service Area: Pennsylvania, Delaware, New Jersey & Maryland
  • Clients: Developers, contractors, corporate end-users, public & private institutions
  • Services: Architecture, Interior Design & Landscape Architecture
  • Building: Site 1: 10,671 sq. ft.; Site 2: 5,842 sq. ft.; Site 3: 4,682 sq ft. (currently expanding)
  • Reason for Selling: Exit and Retirement Planning
  • Personnel: 78 Employees including owners, who will stay on under new ownership
  • Seller Training Period: 2+ years
  • Growth Opportunities: Expanding market share in healthcare and senior living; Opening new location in mid- or western PA.
  • Current Owner’s Responsibilities: Three owners serve as president, VP of marketing, and VP of operations; All owners also spend 40% of their time on billable work as architects or landscape architects

Financial Highlights

  • List Price: $11,500,000
  • Gross Sales:
    • 2020: $20,142,892 Annualized
    • 2019: $16,451,782
    • 2018: $17,745,051
    • 2017: $13,047,518
    • 2016: $9,649,030
  • Cash Flow:
    • 2020: $4,407,752 Annualized
    • 2019: $2,935,924
    • 2018: $3,328,272
    • 2017: $1,392,709
    • 2016: $919,028
  • Assets Included in Purchase*
    • A/R: $4,500,000

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan-March 2020
P&L StatementTax ReturnTax ReturnTax ReturnNotes
Q1: 20202019201820172016
GROSS SALES$5,035,723$16,451,782$17,745,051$13,047,518$9,649,030
Annualized$20,142,892
Net Income Shown on Financial Statement$1,098,657$2,871,856$3,281,356$1,359,013$873,839
ADDBACKS
Depreciation$0$39,507$3,912$3,774$4,329
Interest$3,281$8,349$24,404$11,322$22,260
Amortization$0$0$18,600$18,600$18,600
Contributions/Donations$0$16,212$0$0$0
TOTAL ADDBACKS$3,281$64,068$46,916$33,696$45,189
Seller's Cash Flow = Total Addbacks + Net Income$1,101,938$2,935,924$3,328,272$1,392,709$919,028
Annualized
Profit Margin21.88 %17.85 %18.76 %10.67 %9.51 %
Profit Margin: 18%

Clients

  • Developers
  • Contractors
  • Corporate end-users
  • Public & Private Institutions

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

Services

  • Architecture
  • Interior Design
  • Landscape Architecture

Personnel

  • 78 employees (including 7 owners)
    • 3 owners serve as President, VP of Marketing, and VP of Operations

Growth Opportunities

  • Expand market share in healthcare and senior living
  • Open new location in middle or western Pennsylvania

Valuation Details

The Firm 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 prescribed multiple is determined 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 multiplier.

For this business, the 2019 Cash Flow was used with a prescribed multiple of 4.  With this information, the computation is as follows:

$2,935,924      x          4          =          $11,743,696

The fair market value found above positions the business list price at $11,500,000.

Funding Example

Purchase Price:                           $11,500,000

12%Buyer Down Payment:          $1,380,000

16%Seller Financing:                   $1,840,000

72%Bank Loan:                             $8,280,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $34,303.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $108,811.

After business expenses and loan payments, a buyer with a 12% down payment of $1,380,000 would retain a profit of $1,218,554, which results in an 88% 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 $11,500,000 with the terms listed above, the coverage ratio is 1.71.

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. 

Purchase Price:

$11,500,000

$
%
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:
2019 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2019 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
Omaha, NE 68114

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