Airport Based IT Support & Access Management
Low overhead – all work completed on-site with a 45% profit margin!
This business provides excellent tech support as a subcontractor for Chicago Airports, and has very low overhead – all work is completed on-site, so no office or the related expenses are needed! They provide IT support, access management support, and telephony support under lengthy contracts. Employees for this company work at O’Hare International Airport, Midway International Airport, and a downtown office for the Chicago Department of Aviation. All locations are in the Chicago metropolitan area.
There are three separate contracts for three separate contractors for three separate services.
- Contract 1 has been in place since February 2020 and is up for renewal in 5 years. There are two technicians on this contract.
- Contract 2 has been in place for 6 years. It is serviced by two employees.
- Contract 3 has been in place for 14 years and will be extended in the fourth quarter of 2020. This contract does not require a full-time employee; the business dedicates one of the four full-time employees to place orders for equipment as needed.
This company was not impacted by Covid-19. In fact, their workload increased. This business has been a provider to the Chicago Department of Aviation for over 15 years. Having weathered administrative changes, they are an incumbent provider and have a deep knowledge of the systems and infrastructure used by their client as well as the distinct ability to focus on and address the detailed needs of this large and complex organization.
Priced at $920,000 this is a Midwestern company that is in a position to grow with the technology by increasing into additional spaces and also increase their contract sizes. The ROI will be 182.36% in the first year. Increasing staff to take on additional contracts would lead to continual growth of the company.
- Year Established: 2005
- Location: Chicago, Illinois
- Services: IT Support (9%), Access Management Support (85%), Telephony Support (6%) under lengthy contracts for the Department of Aviation
- Building: Employees work on-site at clients’ offices
- Reason for Selling: Retirement
- Personnel: Owner + 3 FT Employees
- Seller Training Period: 1 year
- Growth Opportunities: Increase contract amount or duties in next RFP, increase staff to take on additional contracts, grow with the technology into additional spaces
- Current Owner’s Responsibilities: Some desktop support, business development
- List Price: $920,000
- Gross Sales:
- 2020: $649,196
- 2019: $642,626
- 2018: $479,840
- Cash Flow:
- 2020: $137,289
- 2019: $235,125
- Assets Included in Purchase:
- Intangible Assets: Extremely low overhead, incumbent IT contractor to the Chicago Department of Aviation, on-site service, extremely reliable, great customer service, innovative ideas for customers
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$114,349||$216,155||$71,638||$126,870||$162,699|
|Meals & Entertainment||$1,534||$2,455||$4,579||$5,400||$7,916|
|Commissions||$0||$0||$1,055||$0||$117,900||Paid to Owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$137,289||$235,125||$86,501||$147,864||$303,666|
|Profit Margin||21.15 %||36.59 %||18.03 %||24.09 %||76.40 %|
- Desktop Support
- Supports proprietary Financial Management Systems (FMS)
- Supports aviation software
- Supports Microsoft Office and standard Microsoft programs
- This project is managed and completed by the owner
- Access Management Support
- Provide employees and dignitaries access to secured areas throughout the airports
- Support the security camera system
- Telephony System Support
- Voiceover IT phones
- Increase contract amount or duties in next RFP cycle
- Increase staff to take on additional contracts
- Grow with the technology into additional spaces
- Diversify client base
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 prescribed multiple is determined 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 multiplier.
For this business, the 2019 Cash Flow was used with a prescribed multiple of 3.95. With this information, the computation is as follows:
$235,125 x 3.95 = $928,743
The fair market value found above positions the business list price at $920,000.
Purchase Price: $920,000
10%Buyer Down Payment: $92,000
15%Seller Financing: $138,000
75%Bank Loan: $690,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,573
Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $7,660
After business expenses and loan payments, a buyer with a 10% down payment of $92,000 would retain a profit of $167,775, which results in a 182.36% 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 $920,000 with the terms listed above, the coverage ratio is 2.37.
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.
2019 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2019 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
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