Opportunities
Translating & Interpreting Services for Schools, Hospitals, and Legal System
A down payment of $49,000 returns $158,235 in the first year after debt payments!
Specifications
Priced at $490,000, a down payment of $49,000 returns $158,235 in the first year after debt payments – a 323% return on investment! Serving large health care, municipal legal, and school systems, along with commercial businesses, Social Security Administration, and individual customers, the seller of this LSP business is willing to do performance based earnout to show vested interest. Interpreting 50+ languages accounts for 85% of revenues, with translation of 150 languages accounting for the remaining 15%. With 102 contracted employees, 75 of which are local interpreters, this business operates with low overhead, earning a 30% profit margin last year. Established in 1997, many customers have been with this firm for over twenty years and have strong working relationships to draw upon. The owner, who is willing to remain part of the team for a couple of years to ensure continuity of operations, remotely manages the day-to-day operations and routes the work to the team of translators. The translating duties could be distributed to a contracted employee, if desired.
Current administrative operations are completed remotely and both contracted coordinating assistants work part-time from their home. The bank of seventy-five contracted interpreters are local and take assignments throughout Northeast Ohio and work in over fifty languages. The team of twenty-five translators work in over 150 languages and are all remote hires.
This small but mighty team has grown their customer base and maintained a positive reputation in the area. To build upon current successes, investment in marketing could be effective in generating new clients as could networking with local business owners. There is complete confidence that this business will flourish again post-pandemic.
Business Highlights
- Year Established: 1997
- Location: Cleveland, Ohio
- Service Area: Interpreting: Northeast Ohio; Translating: Nationwide
- Services: Interpreting (85%): Northeast Ohio; Translating (15%): Nationwide
- Clients: Large health care systems, municipal legal system (courts and lawyers), commercial businesses, individual customers, school systems
- Lease: Work remotely! Low overhead!
- Reason for Selling: Retirement planning
- Contracted Employees: 102: 2 Coordinating assistants, 75 local interpreters, 25 remote translators
- Seller Training Period: Owner is willing to remain a part of the team for 1-2 years to ensure continuity in operations and service
- Growth Opportunities: Invest in targeted marketing to reach new customers, consider upgrading technical operations to increase efficiency, network with local business owners to generate connections
- Current Owners’ Responsibilities: Operates business
Financial Highlights
- List Price: $490,000
- 2-Year Average Cash Flow: $221,196
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Jan-Dec 2020 Cash | Tax Return Cash | Tax Return Cash | Tax Return Cash | Notes |
| 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $350,220 | $768,545 | $736,752 | $544,939 | |
| Net Income Shown on Financial Statement | $102,528 | $223,363 | $159,552 | $101,228 | |
| ADDBACKS | |||||
| Compensation to Owner | $50,000 | $50,000 | $50,000 | $30,000 | |
| Meals & Entertainment | $0 | $509 | $832 | $832 | |
| Professional Fee | $7,306 | $1,400 | $0 | $2,700 | |
| TOTAL ADDBACKS | $57,306 | $51,909 | $50,832 | $33,532 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $159,834 | $275,272 | $210,384 | $134,760 | |
| Profit Margin | 45.64 % | 35.82 % | 28.56 % | 24.73 % |
- Profit margin 2019: 30%
Typical Clients
- Large health care systems
- Municipal legal system (courts and legal)
- Commercial businesses
- Individual customers
- School systems
- Social Security
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
2020 / COVID Notes
Hospital systems and school systems were not at full capacity, which impacted the 2020 numbers; however, there is complete confidence this business will flourish again post-pandemic. The seller is willing to do performance based earnout to show vested interest.
Services
- Interpreting (50+ languages): 85%
- Healthcare
- Courts, immigration, lawyers
- Commercial business
- Events, conventions, sports games
- Schools – 15 local school districts, IEP, testing, conferences, documents
- Translating (150 languages): 15%
- Commercial business
- Brochures
- Advertising
- Instructions
- Documents
- Documents
- Legal documents
- Technical documents
- Personal records
- Financial documents
- Commercial business
Employees
Total Contracted Employees: 102
- 2 Coordinating assistants
- 75 Local interpreters
- 25 Remote translators
Growth Opportunities
- Invest in targeted marketing to reach new customers
- Consider upgrading technical operations to increase efficiency
- Network with local business owners to generate connections
Valuation Details
The Firm Advisors used a cash flow valuation methodology to determine the purchase price of the business.
Cash flow is the sum of business net income plus any owner perks and any non-onward expenses. Then we prescribe a multiple based on 20 parameter which valuate the health of the business. For this valuation, we used the 2-Year Average Cash Flow (2018 & 20190 value making the business price much more favorable to the buyer.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
With this information, the computation is as follows:
$221,196 x 2.25 = $497,691
Funding Example
Purchase Price: $490,000
| 10%Buyer Down Payment | $49,000 | Must be unborrowed funds |
| 15%Seller Financing or Equity | $73,500 | 5-year term at a rate of 4.50% = a monthly loan payment of $1,167 |
| 75%Bank Loan | $367,500 | 10-year term at a rate of 6% = a monthly loan payment of $4,080 |
- Cash Flow: $221,196
- Annual Payment:
- To Seller: $14,001
- To Bank: $48,960
- Net Profit (after expenses and loan payment): $158,235
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-year average 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-year average 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: | % |
Attachments
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210 N 78th St. 2nd FloorOmaha, NE 68114
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