Opportunities
78 Employees – Multi-Location Architecture Firm
Architecture, interior design, and landscape architecture with 75% recurring clients – owners will stay on 3-10 years!
Specifications
The owners of this architecture firm has 75% recurring clients – the owners will stay on 3-10 years! With multiple locations and 78 professionals on staff, this firm specializes in architecture (75%), interior design (20%), and landscape architecture. Established In 1973, the business has a 3-year average cash flow of over $3.3M and an 18% profit margin. The owners are looking for an industry consolidation and are willing to roll equity up to 20%, showing a vested interest in the company. Their highly skilled team of many long-tenured employees includes a 53 Architecture Associates, 14 in Interior Design, 2 in Landscape Architecture, and 9 Operations Associates; all staff members serve firm-wide functions. There are a number of current employees who the owners have identified as having the aptitude to grow into leadership roles in the future. The majority of their client base is in the private sector, with a significant portion of those being developers for individual corporate clients and higher education. Serving regionally in Pennsylvania, Delaware, New Jersey, and Maryland, the team currently has approximately 300 active projects.
The firm is known for providing top-notch architecture and design services in the area for 47 years. There is immense growth potential through a smaller bolt-on acquisitions, and a new owner could expand market share in healthcare and senior living.
The current owners want to establish an economically sustainable model for the purchase of shares from the three principals who will reach retirement age within the next 3 to 7 years. A sale could also provide the opportunity for enhanced growth.
Business Highlights
- Year Established: 1973
- Location: Multi-Location in Pennsylvania
- Service Area: Pennsylvania, Delaware, New Jersey & Maryland
- Services: Architecture (75%) Interior Design (20%) & Landscape Architecture (5%)
- Clients: Developers, contractors, corporate end-users, public & private institutions
- Projects: Approximately 300 active projects
- Building: Site 1: 10,671 sq. ft.; Site 2: 5,842 sq. ft.; Site 3: 4,682 sq. ft. (currently expanding)
- Reason for Selling: Industry consolidation, strategic exit
- Personnel: 78 employees including 7 owners, 46 Architecture Associates, 14 in Interior Design, 2 in Landscape Architecture, and 9 Operations Associates
- Seller Training Period: All owners will stay 3-10 years
- Growth Opportunities: Growth through smaller bolt-on acquisitions, expanding market share in healthcare and senior living, increase landscape architecture projects
Financial Highlights
- List Price: $12,800,000
- Gross Sales:
- 2020: $17,637,524 Annualized
- 2019: $17,322,177
- 2018: $17,745,051
- Cash Flow:
- 2020: $3,141,338 Annualized
- 2019: $3,507,837
- 2018: $3,328,272
- Assets Included in Purchase*
- Office Furniture, Fixtures, and Equipment: $478,896
- Software: $274,864
- A/R: $4,462,431
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Jan-Aug 2020 | Tax Return Cash | Tax Return Cash | Tax Return Cash | Notes |
| 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $11,758,349 | $17,322,177 | $17,745,051 | $13,047,518 | |
| Annualized | $17,637,524 | ||||
| Net Income Shown on Financial Statement | $2,034,731 | $3,476,976 | $3,281,356 | $1,359,013 | |
| ADDBACKS | |||||
| Depreciation | $0 | $3,912 | $3,912 | $3,774 | |
| Interest | $6,066 | $8,349 | $24,404 | $11,322 | |
| Amortization | $0 | $18,600 | $18,600 | $18,600 | |
| Contributions/Donations | $3,995 | $0 | $0 | $0 | |
| Insurance Premiums for Owners: Health, Life, Auto | $49,433 | $0 | $0 | $0 | |
| TOTAL ADDBACKS | $59,494 | $30,861 | $46,916 | $33,696 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $2,094,225 | $3,507,837 | $3,328,272 | $1,392,709 | |
| Annualized | |||||
| Profit Margin | 17.80 % | 20.25 % | 18.76 % | 10.67 % |
Clients
- Senior Living
- Multifamily
- Single-Family
- Healthcare
- Higher Education
- Corporate
- Industrial/Warehousing
- Retail
- Hospitality
- Civic & Cultural
3 Major Service Offerings
- The majority are in the private sector, a significant portion of those are developers – individual corporate clients, higher education, and some public work for Delaware county and the State of Delaware (not their primary focus).
- 75% architecture, then 15-20% interiors (20 people in this group) but largely this is not a standalone project; it’s usually a part of the architecture work that they do. Landscape architecture has room for expansion, some independent projects.
- Consciously they have not established an engineering vertical because they work well with their engineering contractors and they choose which engineers will be working on the project.
Income Analysis
Personnel
78 employees:
- 7 Principals/Shareholders
- 20 Registered Architects
- 6 Senior Architectural Designers
- 20 Intern Architects
- 5 Senior Interior Designers
- 9 Interior Designers
- 1 Registered Landscape Architect
- 1 Intern Landscape Designer
- 3 Marketing & Business Development Associates
- 2 Accounting Associates
- 3 Administrative Associates
- 1 Information Technology Associate
In addition to the staff Landscape Architect, one principal is a Registered Landscape Architect
All staff serve firm-wide functions.
The Principals have identified 5 future leaders of the firm and will be promoting these staff members in 2020. They have also identified addition staff who they believe have the aptitude to grow into leadership roles in the future.
Tenure & Recruiting:
- Mentoring Program: trains people – when they leave, it’s typically due to a life cycle event. For recruitment, they visit college campuses of several different schools to recruit.
“There are multiple reasons we are considering a sale. From a financial perspective, we want to establish an economically sustainable model for the purchase of shares from the three principals who will reach retirement age within the next 3 to 7 years. A sale could also provide the opportunity for enhanced growth.”
~Majority Owner
Growth Opportunities
- Growth through smaller bold-on acquisitions
- Expand market share in healthcare and senior living
- Increase landscape architecture projects
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