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Interior Design Services in Chicago - $1.2M in Sales in 2020

Recently moved into a beautiful new design studio!

CASH FLOW
$184,656

Specifications

  • Price
    $670,000

  • Revenue
    $1,236,209

  • Cash Flow
    $184,656

  • Location
    Chicagoland

  • Employees
    5: 2 Senior designers, 1 junior designer, 1 project manager, 1 administrative

  • Profit Margin
    15%

  • Service Area
    Chicagoland

  • Reason for Sale
    Retirement planning

  • Intangible Assets
    Excellent reputation, superior social media reviews, positive and long-standing relationships with vendors

With a move into a beautiful new design studio, this interior design business boasted over $1.2M in sales in 2020! Located in the Chicago area, this award-winning full-service company is well-known for its client-oriented approach and one-of-a-kind luxury homes, hospitality spaces, and commercial projects. The team of five includes 2 Senior Designers, 1 Junior Designer, 1 Project Manager, and 1 Administrative Assistant. They specialize in kitchen & bathroom remodeling, redesigning living spaces such as great rooms, dining rooms, and bedrooms, and new construction & major remodeling. Projects include furniture plans, selections, fabrics, area rugs, window treatments, lighting, paint, and accessories. Clients include high-end homeowners, business owners, executives, architects, and general contractors.

 

The team handles approximately 10-12 projects at one time, with the average sale size in the $55k range. Software in use includes Studio Designer, CAD, Minutes Matter, SketchUp, and Revit. Established for over 20 years, the business has an excellent reputation, superior social media reviews, and positive & long-standing relationships with vendors. The owner will stay on board for up to 2 years to ensure a smooth transition.

 

Priced at $670,000, a 10% down payment of $67,000 returns $95,227 in the first year after debt payments – a 142% return on investment. The company is off to a very strong start in 2021 with several large projects on the horizon. A new owner could grow the business by advertising and networking within the community and engaging on social media platforms to generate interest in the company’s design style.

Business Highlights

  • Year Established: 20+
  • Location and Service Area: Chicagoland
  • Services: Interior design: new construction and renovation
  • Clients:  High-end home owners, business owners, executives, architects
  • Reason for Selling: Retirement planning
  • Employees: 5: 2 senior designers, 1 junior designer, 1 project manager, 1 administrative
  • Seller Training Period: 2 years 
  • Growth Opportunities: Advertise & network within the community, engage on social media particularly Instagram and Pinterest to generate interest in their design style
  • Current Owner’s Responsibilities: Operations 

Financial Highlights

  • List Price: $730,000
  • Gross Sales:
    • 2019: $1,518,477
  • Cash Flow:
    • 2019: $218,920
    • 2018: $341,138
    • 2017: $235,036
  • Assets Included in Purchase*
    • Equipment: $15,000
    • A/R: $34,000
    • Intangible Assets: Excellent reputation, superior social media reviews, positive and long-standing relationships with vendors

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
20202019201820172016
GROSS SALES$1,236,209$1,489,951$1,986,941$1,590,666$1,753,206
Net Income Shown on Financial Statement$104,516$117,354$276,658$173,113$258,929
ADDBACKS
Compensation to Owner$97,320$97,320$97,320$97,320$95,914
11% Tax on Owner Salary$10,705$10,705$10,705$10,705$10,551
Depreciation$0$5,871$864$864$1,140
Interest$57$0$1$0$0
Meals & Entertainment$1,720$1,560$1,337$1,297$2,343
Contributions$18,400$0$0$0$0Non-onward going expense
Pension$7,514$8,539$8,738$9,316$7,638Personal expense
Health Insurance$9,936$9,320$7,956$8,182$668Personal expense
Auto Repairs$2,589$3,644$2,900$2,557$4,551Personal expense
Auto Payments$0$0$0$0$7,105Personal expense
Auto Fuel$1,899$2,592$2,592$239$3,563Personal expense
Auto Insurance$0$987$987$943$1,312Personal expense
Home Office$0$1,080$1,080$500$1,573Personal expense
Retain Owner$-70,000$-70,000$-70,000$-70,000$-70,000
TOTAL ADDBACKS$80,140$71,618$64,480$61,923$66,358
Seller's Cash Flow = Total Addbacks + Net Income$184,656$188,972$341,138$235,036$325,287
Profit Margin14.94 %12.68 %17.17 %14.78 %18.55 %

Profit Margin: 15%

Typical Clients

Interior design services for:

  • High-end homeowners
  • Business owners
  • Executives
  • Architects
  • General contractors

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

Additional Facts About Interior Enhancement Group:

  • Projects: 10-12 are managed at one time
  • Presentations are done in person and follow-up details are often handled via email.
  • A beautiful new website was implemented one year ago.
  • Software in use: Studio Designer, CAD, Minutes Matter, Sketch Up, and Revit

Employees

Total Employees: 5

  • 2 Senior designers
  • Junior designer
  • Project manager
  • Administrative

Growth Opportunities

  • Obtain storefront with design studio
  • Advertise and network within the community
  • Engage on social media, particularly Instagram and Pinterest to generate interest in their design style

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 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:

 

$184,656        x                3.65                 =          $673,994

Funding Example

Purchase Price:

$670,000

$
%
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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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.