Mid-Atlantic Architecture & Design Firm with 70+ Professionals
Nearly $16.5MM in sales in 2019!
With nearly $16.5MM in sales in 2019, this firm specializes in architecture, interior design, and landscape architecture! Their highly skilled team of 78 employees 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, and each of them want to stay on under new ownership. The firm also 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%) with a loyal client base of developers, contractors, and corporate end-users, as well as public and private institutions. 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.
- 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
- List Price: $11,750,000
- Gross Sales:
- 2019: $16,451,782
- 2018: $17,745,051
- 2017: $13,047,518
- 2016: $9,649,030
- Cash Flow:
- 2019: $2,935,924
- 2018: $3,328,272
- 2017: $1,392,709
- 2016: $919,028
- Assets Included in Purchase*
- A/R: $4,500,000
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$2,871,856||$3,281,356||$1,359,013||$873,839|
|Seller's Cash Flow = Total Addbacks + Net Income||$2,935,924||$3,328,272||$1,392,709||$919,028|
|Profit Margin||17.85 %||18.76 %||10.67 %||9.51 %|
- Corporate end-users
- Public & Private Institutions
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Interior Design
- Landscape Architecture
- 78 employees (including 7 owners)
- 3 owners serve as President, VP of Marketing, and VP of Operations
- Expand market share in healthcare and senior living
- Open new location in middle or western Pennsylvania
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 $11,750,000.
Purchase Price: $11,750,000
12%Buyer Down Payment: $1,410,000
16%Seller Financing: $1,880,000
72%Bank Loan: $8,460,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $35,049.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $111,176.
After business expenses and loan payments, a buyer with a 12% down payment of $1,410,000 would retain a profit of $1,181,219, which results in an 84% 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 $11,750,000 with the terms listed above, the coverage ratio is 1.67.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2019 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2019 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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