Full-Service General Contractor & Construction Management
Well-established for over 40 years!
This general contracting & construction management company has been well-established for over 40 years in Southeastern Pennsylvania! Serving primarily within a 50-mile radius of Reading, the highly skilled team of 26 people offers a vast array of services to their loyal clientele and are known for exceeding customer expectations. 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. Their clientele is comprised of municipal, industrial, educational, healthcare, and general commercial.
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. One owner is a registered architect, and 3 on staff are certified healthcare constructors. 18 trucks, 4 passenger vehicles, and a skid loader make up $760k in assets.
With sizable number of repeat customers and a solid reputation in place, 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.
- 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:
- List Price: $3,600,000
- Gross Sales:
- 2020: $9,548,634 Annualized
- 2019: $8,156,258
- Cash Flow:
- 2020: $829,964 Annualized
- 2019: $746,525
- Assets Included in Purchase*
- Equipment: 1 skid loader: $18,550
- Vehicles: 18 trucks: $538,869; 4 passenger vehicles: $202,889
- Secured Work: $12.7M in signed contracts
- Average Sale Size: $47,721
- Intangible Assets: Large number of repeat customers and word-of-mouth referrals
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
August 2019-March 2020
August 2018-March 2019
|Net Income Shown on Financial Statement||$137,677||$46,583||$161,553||$20,153,290||$194,303|
|Compensation to Owner||$149,942||$149,942||$224,913||$396,715||$342,940||Owner 1|
|Other Unrelated Salaries||$187,662||$187,662||$281,494||$447,715||$294,940||Owner 2|
|11% Tax on total W2 Salaries||$37,136||$37,136||$55,705||$92,887||$70,167|
|Replacement 1||$-73,333||$-73,333||$-110,000||$-110,000||$-110,000||Owner 2|
|Replacement 2||$-43,333||$-43,333||$-65,000||$-65,000||$-65,000||Owner 1|
|Owner's Life Insurance||$20,000||$20,000||$30,000||$30,000||$30,000||$15k per owner|
|Owner's Auto Lease||$18,666||$18,666||$28,000||$28,000||$28,000||$14k per owner|
|401k - Owner 1||$5,998||$5,998||$8,997||$15,869||$13,718||4% Owner 1|
|401k - Owner 2||$7,506||$7,506||$11,260||$17,909||$11,798||4% Owner 2|
|Seller's Cash Flow = Total Addbacks + Net Income||$553,309||$453,223||$746,526||$21,119,959||$970,627|
|Profit Margin||8.68 %||9.64 %||9.15 %||104.80 %||7.54 %|
- Profit Margin: 9%
- General Contractor
- Construction Management
- Post-Construction Services
- 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
- Expand advertising efforts to increase market share
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, a 2-year average cash flow was used with a prescribed multiple of 4.6. With this information, the computation is as follows:
$788,245 x 4.6 = $3,625,927
The fair market value found above positions the business list price at $3,600,000.
Purchase Price: $3,600,000
12.5%Buyer Down Payment: $450,000
12.5%Seller Financing: $450,000
75%Bank Loan: $2,700,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $8,389.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $35,482.
After business expenses and loan payments, a buyer with a 12.5% down payment of $450,000 would retain a profit of $261,790, which results in a 58% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $3,600,000 with the terms listed above, the coverage ratio is 1.50.
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.
2-year average cash flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2-year average cash flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
This folder is empty.
Access to this Deal Room is restricted
Would you like to access the deal room?Yes, please
Already have an account? Log in here.
Print, sign and send to:210 N 78th St. 2nd Floor
Omaha, NE 68114
Or fax to: