Opportunities
Custom Home Office Furniture Manufacturing & Installation
Essential infrastructure business in the Twin Cities!
Specifications
Specializing in custom fitted furniture for residential and commercial spaces, this company is an essential infrastructure business in the Twin Cities! Specializing in the fabrication of modular furnishings with 10 well-trained personnel, this company has been creative furniture solutions for over 30 years. Their mission is to provide the client with individually designed, high quality furniture solutions at a fraction of the cost of custom-made furniture. With $323,697 in assets, this dynamic company utilizes in-house engineering and manufacturing as well as outside resources to create beautiful solutions that fit any space perfectly, maximizing storage and functionality. The team has successfully altered their process in recent months to include virtual design consultations and they are following all necessary protocols for in-home meetings, deliveries, and installations.
The modular furniture system includes components for offices, storage spaces, bedrooms, home entertainment areas, wall beds, closets, and garages. The owners focus on managing the daily operations including design, sales, ordering, production, marketing, and financial oversight.
Priced at $705,000, a down payment of $70,500 returns $115,209 in the first year after debt payments – a 163% return on investment! Operations are managed from their conveniently located headquarters with ample space for the showroom, offices, and work area for manufacturing and assembly. The team of employees includes designers, sales representatives, and accounting staff, as well as employees who focus on production, assembly, delivery, and installation. Continued growth can be found through increased marketing and networking to residential clients who are working from home. With work already in the pipeline and a flexible transition period, this business is ready for the next owner to step in for continued growth and success.
Business Highlights
- Year Established: 1986
- Location: Twin Cities Area, Minnesota
- Service Area: Primarily local to the Twin Cities and the surrounding areas, some out-of-state customers
- Services: Custom-fitted furniture for home and office
- Clients: Commercial (80%): Educational, medical, churches and professional offices; Residential (20%)
- Lease: 7,200 sq. ft.: Large showroom, office, conference room, private offices, kitchen, restrooms, large work area for manufacturing and assembly
- Reason for Selling: Retirement planning
- Personnel: 10: 3.5 Design and sales; 2 accounting, 4.5 production, assembly, delivery, installation
- Seller Training Period: Seller is willing to remain a part of the team for 6 months – 1 year
- Growth Opportunities: Network and advertise to residential clients working from home
- Current Owners’ Responsibilities: General management
Financial Highlights
- List Price: $705,000
Gross Sales:
- 2020: $1,311,880
Cash Flow:
- 2020: $206,120
- 2019: $225,004
- 2018: $177,156
Clients and Services
Clients:
- Residential
- Commercial
Services
- Office furniture
- Desks
- Storage closets, cubbies
- Partitions and dividers
- Reception and service counters
- Kitchenettes, copy rooms, break rooms
- ADA accessible
- Home furniture
- Office furniture
- Storage closets, cubbies, dividers
- Garage storage solutions
- Bedrooms
- Wall beds
- Entertainment centers
Employees
Total Employees: 10
- 3.5 Design and sales
- 2 Accounting
- 4.5 Production, assembly, delivery, installation
Growth Opportunities
- Network and advertise to build commercial sales
- Expand service area to have a wide-spread coverage of the entire Twin Cities area
- Custom closets
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 2020 Cash Flow 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:
$206,120 x 3.45 = $711,114
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: 2020 Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2020 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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