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Interior Design Firm w/ Procurement for Hotels & Condos

Servicing New England and overseas clients out of Boston since 1989!

CASH FLOW
$241,268

Specifications

  • Price
    $730,000

  • Revenue
    $3,146,915

  • Cash Flow
    $241,268

  • Down Payment
    10%

  • Multiplier
    3.00

  • Location
    Boston, MA

  • Service Area
    New England & Overseas

  • Reason for Sale
    Recently married and relocating out of state

  • Employees
    8 – 1 Design Director, 1 Senior Designer, 1 Senior CAD Designer, 1 Designer, 1 Purchasing Agent, 1 Junior Designer, 1 Renderist, 1 Bookkeeper Seller

 

Servicing New England and overseas clients out of Boston since 1989! This interior architecture firm serves mostly commercial clients with a focus on condos and the hospitality industry and is credited for over 200 hotels in total. Project examples range from fitness centers, health clubs, country clubs, cafes, entertainment venues, aquariums, planetariums, penthouses, palaces and more. They are equipped to handle most design jobs from interior architecture all the way down to the smallest décor items. This firm has done work all over the world. Main areas of service include the New England area and the Middle East, but contracts frequently occur in the Caribbean, Chicago-metro and Texas. Some of their work is recognizable in Times Square. They have also reinvented a 1,500-family compound outside of Boston and brought its design up to modern day.

 

The business is best known for their timeliness and their guarantee to always be on budget. This design firm is a very well known in the Boston area and most clients are acquired through word-of-mouth referrals from completed contracts. Along with a great reputation, they also have excellent personnel. Employees include 1 design director, 1 senior designer, 1 senior CAD designer, 1 designer, 1 purchasing agent, 1 junior designer, 1 renderer, and 1 bookkeeper! Creating additional marketing plans and increasing in-person sales are options to help continue to grow this business. The firm is currently under contract for a 10,000 square foot restaurant and six other restaurant venues.

 

Owner currently focuses on sales, acquiring contracts and creating designs with staff. Staff is tenured and capable of taking over design work. Owner does not do any drawing or CAD work but oversees overall strategy and interfaces with key employees. They have minimal contact with clients. The current plan is also to expand staff to include two more senior designers and an intern. The current owner will provide a transition time of 2-4 years!

 

Business Highlights

  • Year Established:1989
  • Location: Boston, MA & Overseas
  • Service Area: New England
  • Clients: Mostly commercial with a focus on condos and hospitality industry
  • Services: Interior Architecture, Design and Procurement
  • Office Space: Open design for work, private conference space, kitchen, bathroom and storage in basement, parking available 
  • Reason for Selling: Recently married and relocating out of state
  • Personnel: 8 – 1 Design Director, 1 Senior Designer, 1 Senior CAD Designer, 1 Designer, 1 Purchasing Agent, 1 Junior Designer, 1 Renderist, 1 Bookkeeper
  • Seller Training Period: Owner would stay for a period of 2-4 years
  • Growth Opportunities: Increase marketing, more in-person sales
  • Current Owner’s Responsibilities: 3.5 days of oversight 

Financial Highlights

  • List Price: $730,000
  • Gross Sales:
    •  2019: $3,146,915
    •  2018: $1,896,016
    •  2017: $1,592,426
    •  2016: $1,336,173
  • Cash Flow:
    • 2019: $241,268
    • 4 Year Average: $190,148
  • Assets Included in Purchase*
    • Equipment: Office Equipment, Computer Equipment
    • A/R: $344,628
    • Intangible Assets: Amazing Reputation, Worldwide recognition, Variety of design, 

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Clients

  • Hotels
  • Condominium Owners
  • Fitness Centers
  • Cafes
  • Country Clubs
  • Event Venues
  • and More

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Interior Architecture
  • Interior Design
  • Design Procurement
  • Exterior Improvements
  • Laser-Cut Paneling
  • LED Lighting
  • Outdoor Installation

Personnel

  • 1 Design Director 
    • 26 Years at Business
  • 1 Senior Designer
    • 5 Years at Business
  • 1 Senior CAD Designer
    • 6 Years a Business
  •  1 Designer
    • 4 Years at Business 
  • 1 Purchasing Agent
    • 1 Year at Business
  • 1 Junior Designer
    • New Employee
  • 1 Renderist
    • Per Project Contracted
  • 1 Bookkeeper
    • 1 Year at Business

Growth Opportunities

  • New Marketing Campaigns
  • More In-Person sales
    • Current new customers are acquired via word-of-mouth

Valuation Details

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 2019 Cash Flow was used with a prescribed multiple of 3.  With this information, the computation is as follows:

$241,268         x          3          =          $723,804

The fair market value found above positions the business list price at $730,000.

Funding Example

 

Purchase Price:                             $730,000

10%Buyer Down Payment:        $73,000

10%Seller Financing:                  $73,000

80%Bank Loan:                         $584,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,361.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $6,484.

After business expenses and loan payments, a buyer with a 10% down payment of $73,000 would retain a profit of $147,134, which results in a 201% return on investment in the first year.

A lender is required to have a minimum 1.25 coverage ratio for any business loans extended. At a proposed purchase price of $730,000 with the terms listed above, the coverage ratio is 2.56. 

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.

Purchase Price:

$730,000

$
%
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:
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: %

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

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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.