Opportunities
Niche Fabrication of Counters & Shelving for Commercial, School, & Hospital Clients
Sold
$2.4M in secured work and nearly 100% collateralized!
Specifications
This business has $2.4M in secured work and is nearly 100% collateralized! A 12.5% down payment of $140,625 returns $167,733 in the first year after debt payments! Typical clients include restaurants, retail, educational institutions, health care facilities, office spaces, hospitality, museums, and religious centers. The team of 17 is well-trained and demonstrate their expertise on every project. One controller, two project managers, two estimators, and one draftsman work in the office, while eleven individuals carry out production. Known for creating beautiful spaces, these cabinetry and countertop craftsmen truly make warm and inviting environments tailored to the aesthetics of their customers. The current owner takes on pet projects, reviews large bids, and oversees the company’s finances. He is willing to stay up to 3 years under the new ownership.
Services include custom cabinetry and countertops for retail displays, offices, service counters, decorative installations, bars, board rooms, locker rooms, and beautiful wood accent installations. Serving the Pittsburgh region, Pennsylvania, New York City, and Cleveland areas, they often utilize unique materials in innovative ways to create engaging surroundings and they can meet environmental standards as requested by the customer. With an expansive shop full of the latest equipment, all machinery is in place to continue or expand operations as desired. The spacious 60,000 sq. ft. facility features a substantial shop for production, two floors of office space that include private offices, a server room, a conference room, kitchenettes, and break rooms.
The team could easily be increased to build capacity, if desired. Additional growth could be found by increasing the hospitality customer base or expanding the regional footprint.
Business Highlights
- Year Established: 1999
- Location: Pittsburgh, PA area
- Service Area: Regional, Pennsylvania, New York City to Cleveland
- Services: Custom cabinetry and countertops
- Clients: Commercial customers: restaurants, retail, educational institutions, health care facilities, office spaces, hospitality, museums, religious centers
- Lease: 60,000 sq. ft. facility with private offices, server room, conference room, two kitchenettes and break rooms, lockers, expansive shop for production
- Reason for Selling: Retirement planning
- Personnel: 17+: Controller, 2 project managers, 2 estimators, draftsman, 11 shop craftsmen
- Seller Training Period: Up to three years, if desired
- Growth Opportunities: Build business in the hospitality field, expand regional work, maximize utilization of assets, expand team to increase capacity
- Current Owner’s Responsibilities: Some estimates, general oversight
Financial Highlights
- List Price: $1,125,000
- Gross Sales:
- 2020: $2,604,554 Annualized
- 2019: $2,406,598
- Cash Flow:
- 2020: $476,260 Annualized
- 2019: $328,784
- Assets:*
- Equipment: $1,072,000: Software, furniture, office equipment, plant equipment and machinery
- Vehicles: $22,000
- A/R: $580,000
- Secured Work: $2,400,000
- Intangible Assets: Beautiful design, ability to utilize diverse materials for a unique aesthetic, diverse client base, one-stop shop for customer convenience
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return Cash | Tax Return Cash | Tax Return Accrual | Notes |
| 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $1,302,277 | $2,406,598 | $2,480,633 | $3,940,836 | |
| Annualized | |||||
| Net Income Shown on Financial Statement | $177,180 | $163,509 | $-278,567 | $486,150 | |
| ADDBACKS | |||||
| Compensation to Owner | $66,000 | $134,000 | $134,500 | $88,077 | Owner |
| Other unrelated Salaries | $7,750 | $31,000 | $31,000 | $31,000 | Wife & son (non-working) |
| 11% Tax on total W2 Salaries | $8,113 | $18,150 | $18,205 | $13,098 | |
| Depreciation | $0 | $19,304 | $22,580 | $26,345 | |
| Interest | $6,032 | $15,206 | $22,178 | $33,307 | |
| Amortization | $0 | $426 | $852 | $852 | |
| Cell Phone | $1,596 | $3,192 | $3,192 | $3,192 | $266/month |
| Meals & Entertainment | $835 | $2,750 | $2,750 | $2,750 | Country club dues |
| Travel | $1,800 | $3,600 | $3,600 | $3,600 | $300/month for gas |
| Life Insurance | $1,324 | $2,647 | $2,647 | $2,647 | |
| Owner Retention/Replacement | $-32,500 | $-65,000 | $-65,000 | $-65,000 | Shop foreman |
| TOTAL ADDBACKS | $60,950 | $165,275 | $176,504 | $139,868 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $238,130 | $328,784 | $-102,063 | $626,018 | |
| Annualized | |||||
| Profit Margin | 18.29 % | 13.66 % | -4.11 % | 15.89 % |
*2018 appears as a loss; however, the Tax Return changed from Accrual to Cash Basis to show accurate financials.
Services and Clients
Custom cabinetry and counters for commercial customers:
- Restaurants
- Retail
- Educational institutions
- Health care facilities
- Office spaces
- Hospitality
- Museums
- Religious centers
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Personnel
Total Personnel: 17
- 1 Controller
- 2 Project managers
- 2 Estimators
- 1 Draftsman
- 11 shop craftsmen
- 2 Solid surface technicians
- 2 Finishers
- 7 General labor
Growth Opportunities
- Build business in the hospitality field
- Expand regional work
- Maximize utilization of assets
- Expand team to increase capacity
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, the 4-year average cash flow was used with a prescribed multiple of 3.45. With this information, the computation is as follows:
$332,250 x 3.45 = $1,146,261
The fair market value found above positions the business list price at $1,125,000.
Funding Example
Purchase Price: $1,125,000
12.5%Buyer Down Payment: $140,625
12.5%Seller Financing: $140,625
75%Bank Loan: $843,750
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,622.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $11,088.
After business expenses and loan payments, a buyer with a 12.5% down payment of $140,625 would retain a profit of $167,733, which results in a 119% 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 $1,125,000 with the terms listed above, the coverage ratio is 2.02.
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