Layout, Install, & Procurement: Corporate Furnishings
A 12.5% down payment of $384,375 returns $436,761 in the first year after debt payments!
A 12.5% down payment of $384,375 returns $436,761 in the first year after debt payments! With clientele comprised of educational facilities (65-70%), corporations (25-30%), and senior living facilities (5-10%) this contract furniture dealer and installation business had over $16MM in revenue in 2019%! Well-established for over 30 years in Harrisburg, PA, this company is known for their creations of innovative spaces. With three impressive showrooms in the Harrisburg area, their vast array of products include seating, desks, tables, classroom furniture (for K-12 and higher education), architectural space (walls, glass enclosures, panels, screens, flooring & rugs) and work tools (whiteboards, podiums, ergonomic office tools, lighting). The current owner works 25+ hours a week!
A highly experienced team is in place and includes 6 designers, 2 project managers, 1 business manager, 3 installers, 7 sales staff, and one person in customer service/office administration. They work both in the office and remotely, partnering with numerous manufacturers to bring their clients exactly what they’re looking for in a creative work environment. Sample showroom pieces comprise their low inventory.
Year-over-year growth since 2017 proves they have a strong client base and remarkable word of mouth advertising. Adding online sales, increasing social media presence, and optimizing the SEO are all areas that would add tremendous growth to the company.
- Year Established: 1989
- Location: Harrisburg, Pennsylvania
- Service Area: Pennsylvania, Maryland, and Delaware
- Clients: Educational facilities (65-70%), general commercial (25-30%), senior living facilities (5-10%)
- Services: Furniture dealer: layout and installation
- Lease: 3 showrooms: Location 1: 5,000 sq. ft. showroom/office + 10,000 sq. ft. warehouse + 4 docks; Location 2: 1,200 sq. ft. showroom; Location 3: 4,000 sq. ft. showroom
- Reason for Selling: New ventures
- Personnel: 20: 6 Designers (5 FT, 1 PT), 2 Project Managers, 1 Business Manager, 3 installers, 7 sales staff, 1 admin
- Seller Training Period: 1 year
- Growth Opportunities: Add online sales, social media, optimize SEO
- Current Owner’s Responsibilities: Works 25+ hours/week
- List Price: $3,075,000
- Gross Sales:
- 2019: $16,283,769
- 2018: $13,700,427
- 2017: $7,073,730
- Cash Flow:
- 2020: $1,674,022 annualized
- 2019: $886,441
- Assets Included in Purchase*
- Equipment: $105,353: Racking, office equipment
- Vehicles: $345,704: Forklift, three 24-foot box trucks
- Inventory: $7,358 (Very low – no inventory other than sample showroom pieces)
- A/R: $378,539
- WIP: $1,100,000
- Intangible Assets: Well-established name for over 30 years, strong and loyal client base, word of mouth advertising
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$654,449||$664,028||$268,823||$231,395||$211,671|
|Compensation to Owner||$53,134||$154,558||$268,823||$231,395||$211,671|
|11% Tax on total W2 Salaries||$5,844||$17,001||$29,570||$25,453||$23,283|
|Meals & Entertainment||$1,897||$7,865||$10,621||$8,591||$12,451|
|Officer's Life Insurance||$1,582||$3,797||$3,797||$3,797||$3,797|
|Seller's Cash Flow = Total Addbacks + Net Income||$697,509||$886,441||$647,907||$471,055||$430,979|
|Profit Margin||18.21 %||5.44 %||4.73 %||6.66 %||4.71 %|
- Education (K-12 and Higher Ed)
- Healthcare Facilities
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Furniture supply, design, and installation
- 6 Designers
- 5 FT, 1 PT
- 2 Project Managers
- 1 Business Manager
- 3 Installers
- More subcontracted out for larger projects
- 7 Sales Staff
- 1 Admin
- Add online sales
- Increase social media presence
- Optimize SEO
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 3.5. With this information, the computation is as follows:
$886,441 x 3.5 = $3,102,544
The fair market value found above positions the business list price at $3,075,000.
Purchase Price: $3,075,000
12.5%Buyer Down Payment: $384,375
12.5%Seller Financing: $384,375
75%Bank Loan: $2,306,250
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $7,166.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $30,307.
After business expenses and loan payments, a buyer with a 12.5% down payment of $384,375 would retain a profit of $436,761, which results in a 114% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $3,075,000 with the terms listed above, the coverage ratio is 1.97.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2019 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2019 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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