High-End Residential & Hospitality Architecture – 37% Profit Margin
With a 95% recurring client base!
With 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 $5,450,000, 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.
- 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
- List Price: $5,450,000 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 Statement||P&L Statement|
Oct 2020-April 2021
October 2019-September 2020
|P&L Statement||P&L Statement||P&L Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$1,157,536||$431,105||$486,152||$480,273||$481,422||$479,932|
|Travel & Vehicle||$5,072||$31,466||$68,746||$61,532||$29,819||$46,508||100% Personal|
|Retain/Replace||$-128,333||$-220,000||$-220,000||$-220,000||$-220,000||$-220,000||To replace/retain owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$1,433,148||$1,189,111||$1,661,580||$1,337,138||$1,536,702||$1,036,635|
|Profit Margin||57.75 %||35.05 %||40.49 %||35.30 %||40.22 %||34.58 %|
- Fiscal year runs October 1 – September 30.
- Gross sales for Oct 2020-April 2021 are nearly $2.5M, annualizing 2021 to be their most profitable year.
- Hotels, Bars, Spas, and Golf Courses
- 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.
- 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
- 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
- Increase marketing/promotional efforts
- Expand on current client relationships
- Focus on high-end small boutique hotels throughout Canada
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
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Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
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The bank will require a minimum ratio of 1.5 to be lendable.
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The amount of money the Buyer will retain as profit.
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