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Custom Artisan Chocolate Gifting Business

Consistently over $250,000 in sales – priced to sell at a 1.7 multiple!

CASH FLOW
$99,456

Specifications

  • Price
    $175,000

  • Revenue
    $160,741

  • Location
    Ramsey County, Minnesota

  • Profit Margin
    62%

  • Lease
    1,800 sq. ft.: 75% production, 25% retail

  • Reason for Sale
    Health

  • Intangible Assets
    Excellent reputation in the industry, award-winning company, superior recipes

  • Employees
    Temporary employees are hired throughout the year based on production requirements

  • Equipment
    Production equipment, refrigerators, molds, kitchen tools, packaging, display cases, shipping materials

 

Consistently over $250,000 in sales – priced to sell at a 1.7 multiple! Producing artisanal chocolates from the finest recipes, this business is an award-winning shop located in the Upper Midwest.  Serving up beautiful boxes of divinely prepared chocolates, truffles, and other delicacies is the specialty of this company.  Customers include many large corporate clients gifting sweets over the holidays as well as walk-in and online retail sales.  The owner operates this business day-to-day and oversees all production and sales.  The owner is willing to remain on-staff through a transition period and will consider a consultancy position for up to one year to help train and guide operations as needed. 

 

Working from a spacious, clean, and organized production facility, the business operates at the top of their field.  The 1,800 square foot location has 75% of its space dedicated to production and 25% of the space is a retail showroom.  With all new equipment, it is set up to grow. With easy access to large metropolitan areas, corporate networking is key to gaining and maintaining large business-to-business orders. 

 

Temporary employees are hired throughout the year as needed.  With the busy production and sales time occurring from October through March, this is the time when staffing needs are greater than typical operations. 

 

This business is ready to grow and with a bit of advertising and networking, the company can scale as large as desired.  Social media engagement could draw in new customers as can building relationships with new corporate opportunities. 

 

Business Highlights

  • Year Established:  15+
  • Location:  Ramsey County, Minnesota   
  • Services: Custom made chocolates for corporate clients, online sales and walk in retail
  • Products:  Chocolates, truffles, decorated chocolates
  • Clients: Large corporate accounts, retail customers desiring high-end treats
  • Lease: 1,800 sq. ft.: 75% production, 25% retail
  • Reason for Selling: Health
  • Employees: Temporary employees are hired throughout the year based on production requirements
  • Seller Training Period: 90 days, owner is also willing to remain a part of the team as a consultant for up to one year. You do not need a food background
  • Growth Opportunities: Advertise to drive sales, expand corporate client base, network within additional cities to increase client base
  • Current Owner’s Responsibilities: Owner/operator

Financial Highlights

  • List Price: $175,000
  • Gross Sales:
    • 2019: $160,741
  • Cash Flow:
    • 2019: $99,456
  • Assets Included in Purchase*
    • Equipment: Production equipment, refrigerators, molds, kitchen tools, packaging, display cases, shipping materials, chocolate enrobing line, automatic chocolate tempering machine
    • Intangible Assets: Excellent reputation in the industry, award-winning company, superior recipes

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnP&L StatementNotes
20192018201720162015
GROSS SALES$160,741$257,657$260,254$251,373$268,188
Net Income Shown on Financial Statement$32,965$59,015$22,000$-34,299$18,852
ADDBACKS
Compensation to Owner$57,965$25,000$6,550$25,000$25,000
11% Tax on total W2 Salaries$6,376$2,750$721$2,750$2,750
Depreciation$0$406$1,852$0$2,207
Meals & Entertainment$24$42$106$374$51
Contributions/Donations$0$0$0$0$120
Loan Application Fee$0$153$0$2,994$399
Loan Origination Fee$0$0$210$250$0
Interest $2,126$12,217$17,697$28,680$11,726
TOTAL ADDBACKS$66,491$40,568$27,136$60,048$42,253
Seller's Cash Flow = Total Addbacks + Net Income$99,456$99,583$49,136$25,749$61,105
Profit Margin61.87 %38.65 %18.88 %10.24 %22.78 %
  • 2019 profit margin: 62%!

Typical Clients

  • Corporate business account
    • Holiday gifting
    • Celebratory gifting
  • Retail
  • Online

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

Employees

  • Temporary employees are hired throughout the year based on production requirements
    • 8-9 Temporary full-time employees from October - March
    • 3 Main employees return year after year
      • Full-time supervisor responsible for fulfillment and quality control
      • Part-time retail and packaging
      • Full-time production assistant and shipping

Growth Opportunities

  • Advertise to drive sales
  • Growing product lines
  • Expand corporate client base
  • Network within additional cities to increase client base
  • Social media engagement
  • Partner with local businesses to include products in luxury gifts, room service, or as favors
  • Explore the luxury wedding industry for gifts or favors

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 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 2019 cash flow was used with a prescribed multiple is 1.7.  With this information, the computation is as follows:

$99,456           x          1.7       =          $169,075

The fair market value found above positions the business list price at $175,000.

Funding Example

Purchase Price:                             $175,000

10%Buyer Down Payment:        $17,500

10%Seller Financing:                  $17,500

80%Bank Loan:                         $140,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $326.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $1,840.

After business expenses and loan payments, a buyer with a 10% down payment of $17,500 would retain a profit of $73,463, which results in a 420% 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 $175,000 with the terms listed above, the coverage ratio is 3.83

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. 

*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.

Purchase Price:

$175,000

$
%
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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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.