Opportunities
High-End Floral & Design Services with 26% Profit Margin
The owner of this business lives out of town and works 2-3 days per week!
Specifications
The owner of this business lives out of town and works 2-3 days per week! Serving Omaha and Lincoln for 20 years, this company focuses on high end weddings and corporate events with an average event sale range of $7,000-$8,000. This business has a unique ability to create and execute any request including lavish floral arrangements, draping, lighting, center pieces, and back drops. A full time lead creative consultant, warehouse studio manager, and a handful of part time employees ensure no detail is overlooked. A large workshop area, storage facility and a consultation office in a nearby city help this company maintain their excellent reputation. Recommendations from party planners, caterers, and former clients have allowed this company to flourish without active advertising. They have recently been nationally recognized in a TLC article. Over the years, a focus on floral has expanded to achieve an even split between floral, rentals, and design.
As seasonality effects all event design companies, the winter months would be a perfect time for a new owner to take this business to the next level. With additional employees & minimal advertising, this company is fit to grow. The owner is willing to train for up to three months.
At the current purchase price of $205,000, a 15% down payment of $30,750 returns $83,970 in the first year after debt payments– a 273% return on investment.
Business Highlights
- Revenue: $414,804
- Cash Flow: $109,039
- Year Established: 2010
- Location: Lincoln, NE
- Service Area: Omaha and Lincoln
- Lease: 1 main warehouse, 1 storage facility, 1 consultation office
- Clients: Wedding and corporate clientele
- Services: Décor, draping, lighting, event rentals, center pieces, back drops and floral
- Employees: 5: 1 FT Lead Creative Consultant, 1 FT Warehouse Studio Manager, 4 PT employees
- Reason for Selling: Family
- Seller Training Period: 3 months
The Team
Employees
This company has 6 highly experienced individuals on staff that take care of its operations:
- 2 Full-Time Employees
- A Creative Consultant
- A Warehouse Studio Manager
- 4 Part-Time Employees
- 2 Full-Time Employees
Owner & Transition
The owner lives out of town and therefore only works 2-3 days per week. The fully trained staff handles the day to day operations. The owner will stay on for 3 months to insure a smooth transition.
Services
- Floral
- Décor
- Draping
- Lighting
- Event Rentals
- Center Pieces
- Back Drops
Financial Highlights
- List Price: $205,000
- Gross Sales:
- 2019 Statement of Revenue: $414,804
- 2019 Tax Return (Cash Basis): $413,860
- Cash Flow:
- 2019 Statement of Revenue: $107,039
- 2019 Tax Return (Cash Basis): $109,039
Assets of Business
- Assets: $58,000
- Equipment: $34,000—office supplies
- Inventory: $24,000-- Amounts fluctuate by season and event; large fully stocked storage facility with various rentals and props, walk-in cooler
- Intangible: Excellent reputation, quality social media presence & reviews, meticulous website, features on national wedding websites.
*See additional asset information in the attachments
Cash Flow Analysis
| Description of Financial Statement | Tax Return Cash Basis | Tax Return Statement of Revenue | Notes |
| 2019 | 2019 | ||
| GROSS SALES | $413,860 | $414,804 | |
| Net Income Shown on Financial Statement | $32,189 | $31,841 | |
| ADDBACKS | |||
| Compensation to Owner | $4,000 | $4,000 | |
| 11% Tax on total W2 Salaries | $440 | $440 | |
| Interest | $10,027 | $10,027 | |
| Amortization | $12,035 | $10,035 | |
| Meals & Entertainment | $348 | $696 | |
| COGS | $50,000 | $50,000 | Inventory Adjustment |
| TOTAL ADDBACKS | $76,850 | $75,198 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $109,039 | $107,039 | |
| Profit Margin | 26.35 % | 25.80 % |
- Profit Margin: 26%
Typical Clients
- High end wedding clients
- Corporate clients
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Differentiators
Industry Overview
Initially, the floral industry took a hit from COVID-19, but the floral industry is now producing more sales than before COVID-19 hit. According to Produce Marketing Association, floral is up 12% from early March.
Growth Opportunites
There are many ways that this company can continue to grow moving forward. Below, we have identified a couple of ideas to implement to see this growth.
Valuation
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 2019 cash flow value 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:
$109,039 x 2 = $218,078
Funding Example
Purchase Price: $205,000
| 15%Buyer Down Payment | $30,750 | Must be unborrowed funds |
| 10%Seller Financing or Equity | $20,500 | 5-year term at a rate of 4.50% = a monthly loan payment of $382 |
| 75%Bank Loan | $153,750 | 10-year term at a rate of 6% = a monthly loan payment of $1,707 |
- Cash Flow: $109,039
- Annual Payment:
- To Seller: $4,586
- To Bank: $20,483
- Net Profit (after expenses and loan payment): $83,970
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: 2019 Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2019 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
| Document Title / Description |
|---|
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210 N 78th St. 2nd FloorOmaha, NE 68114
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