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Fire Protection Engineering Firm in Texas – Over $2M in Sales

With a 60% profit margin and year-over-year growth in sales!

CASH FLOW
$1,239,860

Specifications

  • Price
    $5,265,000

  • Revenue
    $2,076,355

  • Cash Flow
    $1,239,860

  • Location
    Dallas, Texas; satellite office in San Antonio

  • Service Area
    50% local, 40% regional, 10% national

  • Profit Margin
    60%

  • Employees
    7: 1 Owner + 6 FT employees, including 1 Senior Consultant, 1 Senior Designer, 3 Engineers, and 1 Admin

  • Reason for Sale
    Retirement / Age

  • Intangible Assets
    Solid client relationships, word-of-mouth referrals, strong reputation in the area for quality and customer service

With a 60% profit margin and year-over-year growth in sales for 3 years, this Dallas company has a highly skilled team of employees already in place who run the day-to-day operations!  Established for over 25 years, this fire protection engineering firm provides a wide array of services in all phases of fire protection engineering, including building & fire code consulting & engineering, fire alarm systems, automatic sprinkler systems, smoke exhaust systems, fire modeling, plan review, and systems testing. Their diverse client base consists of design professionals (55%), contractors (25%), federal government (10%), and private owners (10%), with their service area covering primarily Texas and surrounding states. The collaborative team of 7 includes the owner, a licensed Fire Protection Engineer, along with 1 Senior Consultant, 1 Senior Designer, 3 Engineers, and 1 Administrative Assistant. The Senior Consultant has over 20 years of experience in the fire protection industry and would be able to assume the role of CEO under new ownership. The team is based out of 2,300 sq. ft. office in Dallas, with a small 200 sq. ft. satellite office in San Antonio.

 

Plan review customers are a portion of their ongoing client base; plan review services provide recurring monthly revenue, as it is a service in constant demand and yields steady cash flow for the company, accounting for approximately 20% of their total revenue per year. The average plan review fee ranges from $500-$1,000. Project sale sizes range anywhere from $2k-$200k, with an average sale size of around $10k. The firm uses state-of-the-art software packages such as AutoCAD, Revit, HydraCAD, AutoSPRINK, CFAST, FDS, Egress, and Intelligibility.

 

Priced at $5,265,000, this firm has seen year-over-year growth in sales for 3 years and a 5-year average profit margin of 47%. A solid team is already in place; they run the day-to-day operations, handle clients regularly, and complete projects successfully. Over the years, this firm has gained a  reputation for providing some of the best services when it comes to fire protection and planning, giving them steady word-of-mouth referrals. Pursuing more projects in colleges & universities, school districts, and in the industrial sector would certainly lead to continued growth.

Business Highlights

Year Established: 1995

Location: Dallas, Texas; satellite office in San Antonio

Service Area: 50% local, 40% regional, 10% national

Services: Full-Service fire protection and life safety consulting & engineering, building & fire code consulting & engineering, automatic sprinkler systems, fire alarm systems, smoke control systems, smoke management systems, smoke exhaust systems, fire modeling, means of egress modeling, plan review, systems testing

Clients: Design professionals (55%), contractors (25%), federal government (10%), private owners (10%)

Lease: Dallas office: 2,300 sq. ft., $4,800/month; San Antonio office: 200 sq. ft. (this space would not be needed for a new owner)

Reason for Selling: Retirement / Age

Personnel: 7: 1 Owner + 6 FT employees, including 1 Senior Consultant, 1 Senior Designer, 3 Engineers, and 1 Admin

Seller Training Period: 6-12 months

Growth Opportunities: Pursuing more projects in college & university work, school district work, and industrial work

Current Owner’s Responsibilities: Preparation of proposals, review of engineers’ work, administrative duties

Employees

1 Owner

  • Preparation of proposals, review of engineers’ work, administrative duties, billings

 

1 Senior Consultant

1 Senior Designer

1 Fire Protection Engineer2 Fire Protection Engineers in Training

1 Administrative

Client Breakdown

Profit Margin

  • 5-year average profit margin of 47%


    Financial Highlights

    • List Price: $5,265,000

    • 2020 Cash Flow: $1,239,860
    • Working Capital: $90,000/month

    *amounts may vary

    Cash Flow Analysis

    Description of Financial StatementP&L Statement
    Jan-March 2021
    P&L StatementTax Return
    Cash
    Tax Return
    Cash
    Tax Return
    Cash
    Tax Return
    Cash
    Notes
    202120202019201820172016
    GROSS SALES$783,589$1,991,188$1,856,279$1,352,092$1,393,944$1,058,850
    Annualized$3,134,356
    Net Income Shown on Financial Statement$497,245$843,577$690,818$273,457$511,855$193,824
    ADDBACKS
    Compensation to Owner$48,750$195,000$195,000$195,000$195,000$195,000
    11% Tax on total W2 Salaries$5,363$21,450$21,450$21,450$21,450$21,450
    Depreciation$0$347$23,924$16,501$0$0
    Interest$7,229$14,830$7,944$6,612$3,699$4,888
    401k$1,950$7,800$7,800$7,800$7,800$7,800Personal Expense
    Auto Expense$4,030$12,000$12,000$12,000$12,000$12,000Personal Expense
    Meals & Entertainment$600$2,400$2,400$2,400$2,400$2,400Personal Expense
    Cell Phone$250$1,000$1,000$1,000$1,000$1,000Personal Expense
    Health Insurance$1,635$6,540$6,540$6,540$6,540$6,540Personal Expense
    Rent Adjustment$20,142$82,667$30,600$30,000$28,200$19,200Rent for apartment in Dallas - non-onward going
    Home Phone/Internet$300$1,200$1,200$1,200$1,200$1,200Personal Expense
    Replacement$-18,750$-75,000$-75,000$-75,000$-75,000$-75,000To replace current owner
    Moving Expense$0$9,268$0$0$0$0One-time cost
    Rent Adjustment$600$2,400$2,400$2,400$2,400$2,400$200/month rent for San Antonio office space (lease ends September 2021) - this office would not be needed moving forward
    TOTAL ADDBACKS$72,099$281,902$237,258$227,903$206,689$198,878
    Seller's Cash Flow = Total Addbacks + Net Income$569,344$1,125,479$928,076$501,360$718,544$392,702
    Annualized
    Profit Margin72.66 %56.52 %50.00 %37.07 %51.55 %37.09 %

    Valuation

    Funding Example

    Purchase Price:

    $5,265,000

    $
    %
    OR
    $
    %
    OR
    $
    Years
    %

    Bank Loan Needed: $

    Years
    %
    $
    $
    $
    $
    $

    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: %

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    210 N 78th St. 2nd Floor
    Omaha, NE 68114

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