Opportunities
Construction Management in Pennsylvania with Diverse Client Base
Owners will stay on board for 3-5 years!
Specifications
The owners of this Southeastern Pennsylvania Construction Management company will stay on board for 3-5 years! Well-established for over 40 years, they serve a diverse customer base covering an array of industries. Typically, they have healthcare projects running, with three individuals on staff who are certified healthcare constructors. They work within several general industrial markets, such as the food industry, with clients in snack food, dairy, and meat production, as well as industrial clients in various other production facilities. In addition to that core work, they serve general commercial business needs, including office and retail space. They offer pre-construction services (site analysis/selection, project budget development, project planning & scheduling, land development coordination, etc.), along with complete construction management services, and post-occupancy follow-up and maintenance contracts, making sure each project is guided from beginning to end. Tracking approximately 400 projects per year, a large portion of their business is from repeat clients, generally over 60% annually, with some customers having 25-year tenure with the company.
The company’s staff works out of a leased 26,000 sq. foot industrial building, which includes 18,500 sq. ft. of warehouse, storage, and woodshop area. Along with the 2 owners, who oversee daily operations, office management, and accounting, the team consists of 5 Project Managers and 17 full-time office staff, field employees, and carpenters. 18 trucks, 4 passenger vehicles, and a skid loader make up $760k in assets.
Priced at $3,550,000, this business is in a prime position for growth. Increasing advertising would capture more market share and would expand this company’s footprint far and wide. A 12.5% down payment of $443,750 returns $479,252 in the first year after debt payments – a 108% return on investment!
Services
Pre-Construction Services
- Site Analysis / Selection
- Due Diligence Assistance
- Feasibility Studies
- Project Budget Development
- Construction Estimating Services
- Construction Management Services
- Project Planning & Scheduling
- Value Engineering & Life Cycle Costing
- Design-Build Services
- Design Phase Coordination
- Land Development Coordination
- Permit Acquisitions
Construction Services
- Traditional Construction Services
- Integrated Project Delivery
- Design Build Services
- Construction Management Services
Post-Construction Services
- Post Occupancy Follow-up & Support
- Maintenance
Income Analysis
Business Highlights
- Year Established: 1977
- Location: Reading, Pennsylvania
- Service Area: Primarily within 50-mile radius of Reading, PA
- Services: General contracting, construction management, post-construction services
- Clients: Municipal, Industrial, Educational, Healthcare, General Commercial
- Certifications: 1 owner is a registered architect, 3 on staff are certified healthcare constructors
- Lease: 26,000 sq. ft. industrial building; 7,500 sq. ft. area for offices, 18,500 sq. ft. for warehouse, storage, woodshop
- Reason for Selling: Approaching retirement
- Personnel: 24 FT + 2 PT: 2 Owners, 5 Project Managers, 17 FT office staff, field employees, & carpenters, 1 PT admin, 1 PT summer staff
- Seller Training Period: 3-5 years if desired
- Growth Opportunities: Expand advertising efforts to increase market share
- Current Owners’ Responsibilities: Owner 1: President, oversees daily operations; Owner 2: Office Manager, Accounting:
Financial Highlights
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Aug 2020-Jan 2021 | Tax Return Accrual | Tax Return Accrual | Tax Return Accrual | Tax Return Accrual | Notes |
| 2021 | 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $6,286,205 | $6,365,756 | $8,156,258 | $20,153,290 | $12,874,050 | |
| Annualized | $12,572,410 | $9,548,634 | ||||
| Net Income Shown on Financial Statement | $755,925 | $137,677 | $161,553 | $54,280 | $194,303 | |
| ADDBACKS | ||||||
| Compensation to Owner | $113,980 | $149,942 | $224,913 | $396,715 | $342,940 | Owner 1 |
| Other Unrelated Salaries | $113,980 | $187,662 | $281,494 | $447,715 | $294,940 | Owner 2 |
| 11% Tax on total W2 Salaries | $25,076 | $37,136 | $55,705 | $92,887 | $70,167 | |
| Depreciation | $76,136 | $89,113 | $99,600 | $104,368 | $134,817 | |
| Interest | $885 | $1,005 | $2,054 | $1,578 | $1,220 | |
| Contributions | $15,000 | $15,270 | $17,950 | $6,628 | $23,724 | |
| Replacement 1 | $-55,000 | $-73,333 | $-110,000 | $-110,000 | $-110,000 | Owner 2 |
| Replacement 2 | $-32,500 | $-43,333 | $-65,000 | $-65,000 | $-65,000 | Owner 1 |
| Owner's Life Insurance | $15,000 | $20,000 | $30,000 | $30,000 | $30,000 | $15k per owner |
| Owner's Auto Lease | $14,000 | $18,666 | $28,000 | $28,000 | $28,000 | $14k per owner |
| 401k - Owner 1 | $4,559 | $5,998 | $8,997 | $15,869 | $13,718 | 4% Owner 1 |
| 401k - Owner 2 | $4,559 | $7,506 | $11,260 | $17,909 | $11,798 | 4% Owner 2 |
| PPP Loan | $-298,800 | $0 | $0 | $0 | $0 | |
| TOTAL ADDBACKS | $-3,125 | $415,632 | $584,973 | $966,669 | $776,324 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $752,800 | $553,309 | $746,526 | $1,020,949 | $970,627 | |
| Annualized | ||||||
| Profit Margin | 11.98 % | 8.68 % | 9.15 % | 5.07 % | 7.54 % |
- COVID caused a down year, which has been completely corrected, proven by the year-over-year comparison shown above of August 2019-January 2020 vs. August 2020-January 2021.
- Fluctuations in revenue from 2017-2019: It’s best to look at it as a 3-year average based on billing cycles and project completion. Staff stayed the same and worked more volume.
- Expenses can get paid in one year, then the next year all of the profits are realized, which is what can lead to high revenue going along with low profit margins.
Clients
- Municipal
- Industrial
- Educational
- Healthcare
- General Commercial
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- General Contractor
- Construction Management
- Post-Construction Services
Personnel
- 2 Owners
- Owner 1: President, oversees daily operations of the business
- Owner 2: Office Manager, Accounting Management
- 5 Project Managers
- 17 Office Staff, Field Employees, Carpenters
- 1 PT Admin Staff
- 1 PT Summer Staff
Growth Opportunities
- Expand advertising efforts to increase market share
Valuation
Funding Example
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: 5-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: 5-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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