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Interpretation Services— Owner Willing to Carry 25%

Serving large health care, municipal legal, and school systems!

CASH FLOW
$232,007

Specifications

  • Price
    $705,000

  • Revenue
    $768,545

  • Cash Flow
    $232,007

  • Location
    Cleveland, Ohio

  • Service Area
    Interpreting (85%): Northeast Ohio; Translating (15%): Nationwide

  • Profit Margin
    30%

  • Intangible Assets
    Long-term relationships with clients, secured large medical clients, low overhead, strong group of contracted employees

  • Reason for Sale
    Retirement planning

  • Employees
    102: 2 Coordinating assistants, 75 local interpreters, 25 remote translators

Serving large health care, municipal legal, and school systems, along with commercial businesses, Social Security Administration, and individual customers, the seller of this LSP business is willing to do performance based earnout to show vested interest. Interpreting 50+ languages accounts for 85% of revenues, with translation of 150 languages accounting for the remaining 15%.  With 102 contracted employees, 75 of which are local interpreters, this business operates with low overhead, earning a 30% profit margin last year. Established in 1997, many customers have been with this firm for over twenty years and have strong working relationships to draw upon. The owner, who is willing to remain part of the team for a couple of years to ensure continuity of operations, remotely manages the day-to-day operations and completes much of the translation work. The translating duties could be distributed to a contracted employee, if desired. 

 

Current administrative operations are completed remotely and both contracted coordinating assistants work part-time from their home.  The bank of seventy-five contracted interpreters are local and take assignments throughout Northeast Ohio and work in over fifty languages.  The team of twenty-five translators work in over 150 languages and are all remote hires. 

 

This small but mighty team has grown their customer base and maintained a positive reputation in the area.  To build upon current successes, investment in marketing could be effective in generating new clients as could networking with local business owners. There is complete confidence that this business will flourish again post-pandemic.


Business Highlights

  • Year Established: 1997
  • Location:  Cleveland, Ohio
  • Service Area:  Interpreting: Northeast Ohio; Translating: Nationwide
  • Services: Interpreting (85%): Northeast Ohio; Translating (15%): Nationwide
  • Clients: Large health care systems, municipal legal system (courts and lawyers), commercial businesses, individual customers, school systems
  • Lease: Work remotely! Low overhead! 
  • Reason for Selling: Retirement planning
  • Contracted Employees: 102: 2 Coordinating assistants, 75 local interpreters, 25 remote translators
  • Seller Training Period: Owner is willing to remain a part of the team for 1-2 years to ensure continuity in operations and service
  • Growth Opportunities: Invest in targeted marketing to reach new customers, consider upgrading technical operations to increase efficiency, network with local business owners to generate connections
  • Current Owners’ Responsibilities: Operates business 

Financial Highlights

  • List Price: $705,000
  • Gross Sales:
    • 2019: $768,545
    • 2018: $736,752
  • Cash Flow:
    • 2019: $232,007
    • 2018: $210,384

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

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan-June 2020 Cash
Tax ReturnP&L Statement
Cash
Tax ReturnTax ReturnNotes
20202019201920182017
GROSS SALES$235,940$768,545$766,361$736,752$544,939
Annualized$471,880
Net Income Shown on Financial Statement$79,408$223,363$223,363$159,552$101,228
ADDBACKS
Compensation to Owner $25,000$50,000$50,000$50,000$30,000
Meals & Entertainment $0$509$1,017$832$832
Professional Fee $3,752$1,400$1,400$0$2,700
TOTAL ADDBACKS$28,752$51,909$52,417$50,832$33,532
Seller's Cash Flow = Total Addbacks + Net Income$108,160$275,272$275,780$210,384$134,760
Annualized
Profit Margin45.84 %35.82 %35.99 %28.56 %24.73 %
  • Profit margin 2019: 30%

Typical Clients

  • Large health care systems
  • Municipal legal system (courts and legal)
  • Commercial businesses
  • Individual customers
  • School systems
  • Social Security

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

2020 / COVID Notes

Hospital systems and school systems are not at full capacity, which has impacted the 2020 numbers; however, there is complete confidence this business will flourish again post-pandemic. The seller is willing to hold 25-30% to show “skin in the game” and vested interest.

Services

  • Interpreting (50+ languages): 85%
    • Healthcare
    • Courts, immigration, lawyers
    • Commercial business
    • Events, conventions, sports games
    • Schools – 15 local school districts, IEP, testing, conferences, documents
  • Translating  (150 languages): 15%
    • Commercial business
      • Brochures
      • Advertising
      • Instructions
      • Documents
    • Documents
    • Legal documents
    • Technical documents
    • Personal records
    • Financial documents

Employees

Total Contracted Employees: 102

  • 2 Coordinating assistants
  • 75 Local interpreters
  • 25 Remote translators

Growth Opportunities

  • Invest in targeted marketing to reach new customers
  • Consider upgrading technical operations to increase efficiency
  • Network with local business owners to generate connections

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 multiple.

For this business, a 2-year average cash flow was used with a prescribed multiple of 3.25.  With this information, the computation is as follows:

$221,196         x          3.25     =          $718,887

The fair market value found above positions the business list price at $705,000.

Funding Example

 

Purchase Price:                             $705,000

10% Buyer Down Payment:   $70,500

25% Seller Financing:          $176,250

65% Bank Loan:                    $458,250

Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $2,798.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $5,088.

After business expenses and loan payments, a buyer with a 10% down payment of $70,500 would retain a profit of $124,946 which results in a 177% 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 $705,000 with the terms listed above, the coverage ratio is 2.32. 

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:

$705,000

$
%
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:
2-year average cash flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2-year average 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.