Opportunities
Engineering Firm w/ 50+ Professionals
Focused on transit and government contracts!
Specifications
Located in beautiful Toronto, this engineering consulting firm has solid long-term relationships with their clients throughout Canada. Their specialties include vibration and noise monitoring, geotechnical instrumentation and monitoring, architectural and multi-engineering design-consulting services. Taking on large, long-term projects for transit authorities, governmental organizations, and general contractors, this company has wide-ranging capabilities creating a consolidated resource for customers to meet their project goals.
A focus of the company is on transit systems including tunneling, subway, rail and subway stations, bridges, sewer and water infrastructure, and highways.
The owner of this business currently oversees operations and is a reliable and very knowledgeable resource for employees. The owner manages the strong growth trajectory and supports positive client relationships. Earning over $5.6MM in revenues, the profit margin for 2018 was 34%. To continue the progression, one could consider offering commissions to the sales team to boost external relationships networking and earning additional contracts.
Operations are managed from the 10,000 square foot headquarters located in the Greater Toronto Area. The knowledgeable team includes professional engineers, vibration and noise experts, architects, specialists, project managers, software engineers, surveyors, as well as administrative staff.
Business Highlights
- Year Established: 2005
- Location: Greater Toronto Area
- Service Area: Canada (95%), international (5%)
- Services: Full-service engineering including civil, geotechnical, hydrogeological, architectural, noise and/or vibration testing, ground and material testing
- Clients: Transit authorities, government, general contractors, subcontractors
- Lease: 10,000 sq. ft.: Offices, conference rooms, open work areas, IT room, break room, restrooms, storage
- Reason for Selling: 1 year
- Personnel: 50: Professional engineers, architects, subject matter experts, software engineers, surveyors, accounting, administration
- Seller Training Period: As negotiated
- Growth Opportunities: Encourage sales by offering commissions to sales team
- Current Owner’s Responsibilities: Oversight
Financial Highlights
- List Price: $8,000,000
- Gross Sales:
- 2019: $4,558,598
- 2018: $5,617,556
- 2017: $4,361,920
- 2016: $3,702,850
- Cash Flow:
- 2019: $1,148,574
- 2018: $1,949,052
- 2017: $1,479,622
- 2016: $1,300,287
- Assets Included in Purchase*
- Equipment: $750,000: Furniture, fixtures, equipment
- A/R: $1,500,000
- Intangible Assets: Knowledgeable team, wide-ranging services creating a centralized option for customers, trust partner for government contracts
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | P&L Statement | P&L Statement | P&L Statement | P&L Statement | Notes |
| 2019 | 2018 | 2017 | 2016 | 2015 | ||
| GROSS SALES | $4,558,598 | $5,617,556 | $4,361,920 | $3,702,850 | $3,007,813 | |
| Net Income Shown on Financial Statement | $1,087,814 | $1,745,272 | $1,323,047 | $1,163,707 | $852,799 | |
| ADDBACKS | ||||||
| Amortization | $0 | $123,712 | $107,923 | $90,601 | $70,240 | |
| Meals & Entertainment | $8,396 | $23,965 | $11,568 | $5,782 | $7,149 | |
| Cell Phone | $300 | $300 | $300 | $300 | $300 | $25/month |
| Donation | $2,300 | $0 | $0 | $0 | $0 | |
| Auto | $49,764 | $55,803 | $36,784 | $39,897 | $40,274 | |
| TOTAL ADDBACKS | $60,760 | $203,780 | $156,575 | $136,580 | $117,963 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $1,148,574 | $1,949,052 | $1,479,622 | $1,300,287 | $970,762 | |
| Profit Margin | 25.20 % | 34.70 % | 33.92 % | 35.11 % | 32.27 % |
- Profit Margin 2019: 25%
Clients
- Transit authorities
- Government
- General contractors
- Subcontractors
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Full-service engineering including civil
- Geotechnical
- Hydrogeological
- Architectural
- Noise and/or vibration testing
- Ground and material testing
Personnel
Total personnel: 50
- 12 Professional engineers
- 3 Architects
- 6 Engineering designers and drafters
- 3 Subject matter experts
- 2 Software engineers
- 18 Field surveyors
- 3 Administration
- 1 Accounting
- 1 Safety officer
- 1 Lab technician
Growth Opportunities
- Encourage sales by offering commissions to sales team
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, a 3 year average cash flow was used with a prescribed multiple is 5.25. With this information, the computation is as follows:
$1,525,749 x 5.25 = $8,010,182
The fair market value found above positions the business list price at $8,000,000.
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