Opportunities
Multifamily & Commercial Plumbing w/ 5 Master Licenses
Sold
Nearly 20 seasoned staff providing service in Johnson/Linn County Area!
Specifications
Their core competencies are multi-family units ranging in size from duplexes to five level buildings with 100+ units; residential work focusing on new houses in the $325,000 to $1,000,000 range and residential remodels at $15,000 and above. The Company offers complete plumbing construction from under slab, above slab rough-in, trench drains, roof drains, fixtures and fixture installation. This company is generally regarded as having the best boiler service and installation team in the area.
With a reliable customer base, this business focuses on taking care of their existing clients and they are able to be specific and selective with new projects and bids. The 6,000 sq. ft. space is owned by the seller, but the space will be available for uninterrupted continued lease after the sale. The building features office and storage space. The owner currently manages estimations and does end of month accounting work. This owner has also developed a strong company culture, creating a close-knit atmosphere where apprentices can learn sound fundamentals, individuals have the tools, equipment and resources they need, and project teams are matched to the projects that are best suited to their individual strengths.
Business Highlights
- Year Established: 1973
- Location: Johnson/Linn County Area
- Service Area: Serving clients within a 50-mile radius
- Demographics: 2,700 Service & Construction Clients
- Services: (12%) Service; (14%) Commercial Construction; (7%) Hydronic Heating; (48%) Multi-Family Construction; (19%) Residential Construction.
- Lease: 6,000 sq. ft.: Office and warehouse, available for continued lease
- Reason for Selling: Retirement
- Employees: 17: 1 Operations Manager, 1 Bookkeeper, 1 Service Scheduler/Receptionist, 5 Master Plumbers, (3) 4th Year Apprentices, (1) 3rd Year Apprentice, (3) 2nd Year Apprentices, (1) 1st Year Apprentice, (1) Helper.
- Seller Training Period: 6 months
- Growth Opportunities: Implement online scheduling for additional service sales
- Current Owner’s Responsibilities: Some estimations, negotiations and end of month billing. You do not need to be a plumber to own.
Financial Highlights
- List Price: $1,920,000
- Gross Sales:
- 2018: $3,508,229
- 2017: $3,510,869
- 2016: $3,464,848
- Cash Flow:
- 2018: $615,249
- Assets Included in Purchase*
- Equipment: $287,228
- Vehicles: $287,227
- Furniture, Fixtures & Equipment: $115,716
- Inventory: $48,000
- Intangible Assets: An established reputation for accurate bids and project timeliness leads contractors & clients to repeatedly seek business
*amounts may vary
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return | Tax Return | Tax Return | Notes |
| 2018 | 2017 | 2016 | 2015 | ||
| GROSS SALES | $3,508,229 | $3,510,869 | $3,464,848 | $3,045,214 | |
| Net Income Shown on Financial Statement | $354,430 | $411,820 | $281,224 | $140,150 | |
| ADDBACKS | |||||
| Compensation to Owner | $114,975 | $184,800 | $149,090 | $121,710 | |
| 11% Tax on total W2 Salaries | $13,060 | $20,664 | $16,730 | $13,669 | |
| Depreciation | $75,326 | $4,531 | $7,057 | $8,322 | |
| Interest | $10,917 | $20,248 | $26,855 | $30,947 | |
| Amortization | $0 | $23,059 | $23,101 | $23,100 | |
| Auto-Personal Use | $13,957 | $11,016 | $10,087 | $11,416 | |
| Disability & Life Insurance | $4,816 | $4,816 | $4,816 | $4,816 | |
| Health & Dental Insurance | $15,618 | $15,618 | $15,618 | $15,618 | |
| Miscellaneous | $6,000 | $0 | $0 | $0 | Sports Tickets |
| Non-Business Telephone | $2,400 | $2,400 | $2,400 | $2,400 | $200/month |
| Director Fees | $3,750 | $3,050 | $3,000 | $2,550 | |
| TOTAL ADDBACKS | $260,819 | $290,202 | $258,754 | $234,548 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $615,249 | $702,022 | $539,978 | $374,698 | |
| Profit Margin | 17.54 % | 20.00 % | 15.58 % | 12.30 % |
Services & Clients
- Multifamily work: This company will take on projects ranging in size from duplexes to 5-level multi-family buildings. They offer complete plumbing construction from under slab, above slab rough-in, trench drains, roof drains, fixtures and fixture installation.
- Residential: Focusing on new residential projects over $325k, this company works with several builders who are consistently loyal.
- Heating: From large school boilers to very small house boilers they offer reliable and highly regarded boiler installation and service in the area with a team of (4) experienced employees. The boiler business is growing, with fewer companies offering boiler services, and the company’s heating services sales reflect that trend.
- Commercial work: Commercial work includes strip malls, auto dealerships, dental offices, day cares and more.
- Service: The company sees a regular repeat customer base requesting services ranging from sump pump replacement, faucet repair, plumbing leaks, toilet repairs and other typical plumbing related services.
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Employees
- Operations Manager
- Bookkeeper
- Front Desk Worker
- Five Licensed Master Plumbers
- Nine Field Employees
Growth Opportunities
- Expand online offering and website interaction including a social media presence to reach new Gen Y and Millennial clients that may or may not be reached by our traditional “word of mouth” presence.
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 2018 cash flow was used with a prescribed multiple is 3.13. With this information, the computation is as follows:
$615,249 x 3.13 = $1,925,729
The fair market value found above positions the business list price at $1,290,000.
Funding Example
Purchase Price: $1,920,000
15% Buyer Down Payment: $288,000
15% Seller Financing: $288,000
70% Bank Loan: $1,344,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $5,369.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $17,662.
After business expenses and loan payments, a buyer with a 15% down payment of $288,000 would retain a profit of $338,874, which results in a 117% 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 $1,920,000 with the terms listed above, the coverage ratio is 2.23.
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.**
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857