Opportunities
Interior Design Services in Chicago - $1.2M in Sales in 2020
Recently moved into a beautiful new design studio!
Specifications
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 Statement | P&L Statement | Tax Return | Tax Return | Tax Return | Tax Return | Notes |
| 2020 | 2019 | 2018 | 2017 | 2016 | ||
| 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 | $0 | Non-onward going expense |
| Pension | $7,514 | $8,539 | $8,738 | $9,316 | $7,638 | Personal expense |
| Health Insurance | $9,936 | $9,320 | $7,956 | $8,182 | $668 | Personal expense |
| Auto Repairs | $2,589 | $3,644 | $2,900 | $2,557 | $4,551 | Personal expense |
| Auto Payments | $0 | $0 | $0 | $0 | $7,105 | Personal expense |
| Auto Fuel | $1,899 | $2,592 | $2,592 | $239 | $3,563 | Personal expense |
| Auto Insurance | $0 | $987 | $987 | $943 | $1,312 | Personal expense |
| Home Office | $0 | $1,080 | $1,080 | $500 | $1,573 | Personal 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 Margin | 14.94 % | 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
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 FloorOmaha, NE 68114
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