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Tech Based Project Management

Owner lives in Australia passively and produces $325K in profit!

CASH FLOW
$325,754

Specifications

  • Price
    $1,140,000

  • Revenue
    $1,016,792

  • Profit Margin
    32%

  • Location
    Colorado

  • Reason for Sale
    Moved to Australia

  • Cash Flow
    $325,754

  • Service Area
    Denver, Colorado; California; Texas; Florida; Illinois; Potential to staff anywhere in U.S.

  • Employees
    6: 4 Employee consultants, 2 contractors

  • Intangible Assets
    Well-known clients, positive reputation in the industry, lower overhead, deep institutional understand of project management and how to reach goals, high return business

Owner lives in Australia passively and produces $325K in profit! Helping companies meet their goals, this private project management company operates with a lower overhead as all employees and contractors work from the clients’ locations.  This team is hired to expedite projects that have not met the expected return on investment, that have internally stalled, or where an in-house team of managers are not available.  Specializations include IT and strategy consulting, management, Agile consulting, system integrations, end-to-end project implementations, and enhancements of systems.  This can include driving change, educating the workforce in a new program or system, and upgrading processes and procedures to get project back on track.  The owner works remotely overseeing placements, human resources, and all administrative tasks.  This owner works part-time oversight and lives out of the country.

 

The team of professional’s work at the client’s office location.  They may, at times, also work remotely.  Employees and contractors can be placed in groupings or individually, based on the needs of the customer and the project requirements.  Most contracts are within Colorado, California, and Texas, with a few in other states.  There is no geographical restriction for expansion of operations, but there remains much room for growth within the Denver area alone.  This team helps companies meet necessary goals, and projects in artificial intelligence or in the financial industry are only the right recruit away.  The team has also built a strong partner network of IT and software providers that acts as another sales channel.


Business Highlights

  • Year Established: 2014
  • Location:  Colorado 
  • Service Area: Denver, Colorado; California; Texas; Florida; Illinois; Potential to staff anywhere in U.S.
  • Services: Project management as a service, technical support, Agile, strategy consulting, full project implementations, integrations, enhancements of systems
  • Clients: Health care, aerospace, mining, government, (Services are not industry specific and can be applied across many different sectors.)
  • Building: Work on-site at client’s location or work from home.  No formal office required.
  • Reason for Selling: Moved to Australia 
  • Employees: 6: 4 Employee consultants, 2 contractors 
  • Seller Training Period: 90 days
  • Growth Opportunities: Build connections with smart city projects, grow Denver area connections and placements, engage in the AI/RPA space, broaden services to include the financial industry, significant partner on-boarding
  • Current Owner’s Responsibilities: Part-time oversight- owner lives out of the country, no labor or billable hours

Financial Highlights

  • List Price: $1,140,000
  • Gross Sales:
    • 2019: $1,681,269
    •  2018: $1,016,792
  • Cash Flow:
    •  2019: $325,918
    • 2018: $325,754
  • Assets Included in Purchase*
    • Intangible Assets: Well-known clients, positive reputation in the industry, low overhead, deep institutional understand of project management and how to reach goals

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan-Nov 15
Tax ReturnTax ReturnTax ReturnNotes
2019201820172016
GROSS SALES$1,487,277$1,016,792$339,597$197,529
Net Income Shown on Financial Statement$112,847$87,281$25,755$170,827
ADDBACKS
Compensation to Owner$119,423$135,000$120,000$0
11% Tax on total W2 Salaries$13,136$14,850$13,200$0
Interest$2,341$765$1,105$60
Auto-Personal Use$3,097$8,596$2,304$2,284
Meals & Entertainment$662$2,553$3,498$2,333
Cell Phone$1,746$2,093$2,500$2,952
Insurance$7,153$7,453$4,052$0
Gifts$20$341$321$313
Travel$27,607$66,822$57,468$9,554
Donations $280$0$0$0
TOTAL ADDBACKS$175,465$238,473$204,448$17,496
Seller's Cash Flow = Total Addbacks + Net Income$288,312$325,754$230,203$188,323
Profit Margin19.39 %32.04 %67.79 %95.34 %
  • 2018 Profit margin: 32%

Typical Clients

  • Fortune 1,000 companies:
    • Health care
    • Aerospace
    • Mining
    • Government
    • Services are not industry specific and can be applied across many different sectors.

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

Services

  • Project management as a service
  • Technical support
  • Enterprise resource planning
  • Consulting – review of existing processes, methodologies, procedures, and techniques
  • End-to-end project implementations
  • System integrations
  • Enhancements of systems
  • Strategic planning
  • Project support

Employees

Total employees: 6

  • 4 Employee consultants
    • 3 in Colorado
    • 1 in Texas
  • 2 Contractors
    • 1 in Colorado
    • 1 in Texas

Growth Opportunities

  • Build connections with smart city projects
  • Grow Denver area connections and placements
  • Establish further presence in Southern California to enhance the current client base and grow new accounts
  • Engage in the artificial intelligence and robotic process automation space
  • Broaden services to include the financial industry
  • Continue to grow partner network of IT and software companies
  • Delivery of software projects that resell vendor software, enabling building a “software as a service” annuity revenue stream as well as the ongoing consulting services fees

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 3.4.  With this information, the computation is as follows:

$325,754         x          3.4       =          $1,107,564

The fair market value found above positions the business list price at $1,140,000.

Funding Example

Purchase Price:                          $1,140,000

15%Buyer Down Payment:      $171,000

30%Seller Financing:                $342,000

65%Bank Loan:                         $627,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $6,376.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $8,240.

After business expenses and loan payments, a buyer with a 15% down payment of $171,000 would retain a profit of $150,367, which results in a 87% 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 $1,140,000 with the terms listed above, the coverage ratio is 1.86. 

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:

$1,140,000

$
%
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:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 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.