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Procurement, Design, & Layout of Furnishings for Schools

Business Manager in place who oversees the 20 qualified and talented staff!

CASH FLOW
$1,745,706

Specifications

  • Price
    $3,200,000

  • Revenue
    $16,283,769

  • Cash Flow
    $1,745,706

  • Equipment
    $105,353

  • Inventory
    $7,357

  • Account Receivable
    $536,129

  • Location
    Harrisburg, Pennsylvania

  • Service Area
    Primarily within Pennsylvania with some clients in Maryland and Delaware

  • Intangible Assets
    Well-established name for over 30 years, strong and loyal client base, word of mouth advertising

With a Business Manager in place who oversees the 20 qualified and talented staff, a 12.5% down payment of $400,000 returns $477,215 in the first year after debt payments. This contract furniture dealer and installation business dealer has clientele comprised of educational facilities (65%), corporations, and healthcare (10%) and had over $16M in revenue in 2019. Well-established for over 30 years in Harrisburg, PA, this company is known for their creations of innovative spaces. With three impressive showrooms in the Harrisburg area, their vast array of products include seating, desks, tables, classroom furniture (for K-12 and higher education), architectural space (walls, glass enclosures, panels, screens, flooring & rugs) and work tools (whiteboards, podiums, ergonomic office tools, lighting). The current owner only works 20 hours a week, given the highly talented Business Manager in place. Selling a low multiple of 2.5, a buyer’s ROI the first year is at 119%. Profits are 477k after all debt payments!

 

A highly experienced team is in place and includes 1 business manager, 6 designers, 2 project managers, 3 installers, 7 sales staff, and one person in customer service/office administration. They work both in the office and remotely, partnering with numerous manufacturers to bring their clients exactly what they’re looking for in a creative work environment. Sample showroom pieces comprise their low inventory.

 

Year-over-year growth since 2017 proves they have a strong client base and remarkable word of mouth advertising. Adding online sales, increasing social media presence, and optimizing the SEO are all areas that would add tremendous growth to the company. 

Business Highlights

  • Year Established: 1989
  • Location: Harrisburg, Pennsylvania
  • Service Area: Primarily within Pennsylvania with some clients in Maryland and Delaware
  • Clients: Educational facilities (65%), general commercial, and healthcare (10%)
  • Services: Furniture dealer: layout and installation
  • Lease: 3 showrooms: Location 1: 5,000 sq. ft. showroom/office + 10,000 sq. ft. warehouse + 4 docks; Location 2: 1,200 sq. ft. showroom; Location 3: 4,000 sq. ft. showroom
  • Reason for Selling: Retirement
  • Personnel: 20: 6 Designers (5 FT, 1 PT), 2 Project Managers, 1 Business Manager, 3 installers, 7 sales staff, 1 admin
  • Seller Training Period: 1 year if desired
  • Growth Opportunities: Add online sales, social media, optimize SEO
  • Current Owner’s Responsibilities: Only works 20 hours/week; there is a highly talented business manager in place

Financial Highlights

  • List Price: $3,200,000
  • Gross Sales:
    • 2019: $16,283,769
    • 2018: $13,700,427
  • Cash Flow:
    • 2020: $1,745,706 annualized
    • 2019: $886,441
  • Assets Included in Purchase*
    • Equipment: $105,353: Racking, office equipment
    • Vehicles: $375,920: Forklift, three 24-foot box trucks
    • Inventory: $7,358 (Very low – no inventory other than sample showroom pieces)
    • A/R: $536,129
    • WIP: $609,910
    • Intangible Assets: Well-established name for over 30 years, strong and loyal client base, word of mouth advertising

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan-Aug2020
Tax ReturnTax ReturnTax ReturnTax ReturnNotes
20202019201820172016
GROSS SALES$8,249,245$16,283,679$13,700,427$7,073,730$9,141,546
Annualized$12,373,868
Net Income Shown on Financial Statement$1,076,312$664,028$385,591$27,569$330,811
ADDBACKS
Compensation to Owner$87,750$154,558$268,823$231,395$211,671
11% Tax on total W2 Salaries$17,001$17,001$29,570$25,453$23,283
Depreciation$5,160$81,516$104,502$24,491$22,071
Interest$2,556$8,155$9,893$979$3,152
Meals & Entertainment$3,012$7,865$10,621$8,591$12,451
Contributions/Donations$2,100$0$0$0$0
Officer's Life Insurance$2,531$3,797$3,797$3,797$3,797
Owner's Auto$14,591$18,569$12,221$9,181$9,922
Travel$1,064$2,309$7,643$2,165$1,840
Country Club$5,060$8,643$12,014$13,608$11,121
Replacement$-53,333$-80,000$-80,000$-80,000$-80,000
TOTAL ADDBACKS$87,492$222,413$379,084$239,660$219,308
Seller's Cash Flow = Total Addbacks + Net Income$1,163,804$886,441$764,675$267,229$550,119
Annualized
Profit Margin14.11 %5.44 %5.58 %3.78 %6.02 %

Year-over-year growth since 2017!

Clients

  • Education (K-12 and Higher Ed)
  • Corporations
  • Healthcare Facilities
  • Contracts:
    • COSTARS
    • GSA
    • MedAssets
    • Novations
    • PA State Contract
    • U.S. Communities

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Furniture supply, design, delivery, and installation
  • Space Planning
  • Project Management
  • Product Inventory
  • Inter-Market Installs
  • Bid Preparation
  • Cost Analysis


Software Used

  • TeamDesign
  • CET
  • AutoCAD

Personnel

  • 1 Business Manager
  • 6 Designers
    • 5 FT, 1 PT
  • 2 Project Managers
  • 3 Installers
    • More subcontracted out for larger projects
  • 7 Sales Staff
  • 1 Admin

Income Analysis

Growth Opportunities

  • Add online sales
  • Increase social media presence
  • Optimize SEO

Funding Example

Purchase Price:                             $3,200,000

12.5%Buyer Down Payment:          $400,000

12.5%Seller Financing:                   $400,000

75%Bank Loan:                             $2,400,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $7,457.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $26,645.

After business expenses and loan payments, a buyer with a 12.5% down payment of $400,000 would retain a profit of $477,215, which results in a 119% return on investment in the first year.

A lender is required to have a minimum 1.25 coverage ratio for any business loans extended. At a proposed purchase price of $3,200,000 with the terms listed above, the coverage ratio is 2.17. 

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.

Purchase Price:

$3,200,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

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: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2 Yr. Avg. ('19-'20) Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2 Yr. Avg. ('19-'20) Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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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.