Security and Automation for Commercial Buildings
Currently more than $12MM in backlog!
Operations are headquartered at the 5,500 square foot facility that features a large warehouse with open and rack storage as well as an office with six private offices, a conference room, and a break room. Seven of the over fifty employees work at the office focusing on administrative tasks, while the rest are union employees who work on-site. The well-rounded crews include project managers as well as supervising managers.
The company has shown good growth over the years and the transition to electrical focused services has benefited this company. A continued dedication to automation, data centers, and security could generate future growth.
- Year Established: 2007
- Location: Missouri
- Service Area: Missouri and Kansas
- Services: Specialized electrical and low voltage work including automation, security, infrastructure, and industrial projects; general contracting
- Clients: Large companies, municipalities, venues, manufacturers, distribution centers, schools
- Lease: 5,500 sq. ft.: Large warehouse with open and rack storage; Office: 6 Private offices, conference room, break room
- Reason for Selling: Retirement planning
- Employees: 50+: 7 Administrative, 43 union field crew including project managers and supervisors
- Seller Training Period: Owners are willing to remain a part of the team for up to one year
- Growth Opportunities: Expand automation projects as well as data center and security work
- Current Owners’ Responsibilities: Estimates, project management and business oversight
- Revenue Mix:40% reoccurring maintenance, 60% new clients/installs. New client projects turn into maintenance
- List Price: $6,150,000
- Gross Sales:
- 2019: $12,555,295 Annualized
- 2018: $10,653,512
- 2017: $11,051,806
- Cash Flow:
- TTM: $1,203,009
- 2019: $1,375,134 January – October
- 2018: $1,010,306
- 2017: $1,122,958
- Assets Included in Purchase*
- Equipment: $146,000: Shop tools, furniture, fixtures, electric benders, tugger, high voltage tester, 2014 John Deer tractor, off road ATV, conduit bender and a track loader
- Vehicles: $601,000: 9 Ford trucks, 6 Chevy Trucks, 2 trailers, 1 load haul and 1 GMC truck. However, owners will keep 2018 Chevrolet and the 2019 GMC
- Secured Work: $12,000,000
- Intangible Assets: Positive reputation, relationships with large companies, understanding of specialized work
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
January - October
|Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$938,266||$-474,128||$543,686||$560,203||$560,675|
|Compensation to Owner||$294,493||$334,892||$334,892||$333,392||$297,008||Owner 1|
|Other unrelated Salaries||$228,216||$255,360||$255,360||$294,206||$214,608||Owner 2|
|11% Tax on total W2 Salaries||$57,498||$64,928||$64,928||$69,036||$56,278|
|Meals & Entertainment||$12,944||$0||$6,040||$8,721||$4,149|
|Owner's Employee Benefit Program||$0||$0||$0||$26,000||$26,000||Owner 1|
|Owner's Employee Benefit Program||$0||$0||$0||$26,000||$26,000||Owner 2|
|Replacement||$-166,666||$-200,000||$-200,000||$-200,000||$-200,000||Owner Replacement $100k each|
|Seller's Cash Flow = Total Addbacks + Net Income||$1,375,134||$1,203,009||$1,010,306||$1,122,958||$990,336|
|Profit Margin||13.14 %||10.86 %||9.48 %||10.16 %||13.43 %|
- Distribution centers
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Specialized electrical and low voltage work:
- Building automation
- Industrial projects
- Fiber cabling
- Fire alarms systems
- General contracting
Total Employees: 50+
- 5 Administrative
- 43 union field crew:
- Project managers
- Electricians (inside wiremen and data techs)
- Owners (2)
- Note a -$100,000 replacement in cash flow
- The owners would be willing to stay for one year. They would be willing to stay longer than a year if the new owner would allow for part time work.
- Owner 1: Works on short term projects, mostly works with ongoing customers and existing companies, bidding
- Owner 2: Works on long term projects such as data centers, building automation, HVAC etc.
- A new owner does not have to be MBE certified
- Expand automation projects
- Work to increase data center
- Build security work revenues
- Continue specialization in these areas to gain larger projects with trusted companies throughout the region.
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 3-year average cash flow was used with a prescribed multiple is 4.9. With this information, the computation is as follows:
$1,261,141 x 4.9 = $6,179,591
The fair market value found above positions the business list price at $6,150,000.
Reasoning behind above average multiple include:
- Consistently over $1M in cash flow
- $10,000,000+ in revenue
- Development of 50+ managers and employees
- $12M in secured work
Purchase Price: $6,150,000
10% Buyer Down Payment: $615,000
15% Seller Financing: $922,500
75% Bank Loan: $4,612,500
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $17,198.
Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $51,208.
After business expenses and loan payments, a buyer with a 10% down payment of $615,000 would retain a profit of $440,264, which results in a 72% return on investment in the first year.
At a proposed purchase price of $6,150,000 with the terms listed above, the coverage ratio is 1.54.
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.
3 year avg
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
3 year avg
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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