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Management of Residential & Commercial Improvement Projects

With little to no overhead and a 129% return on investment!

CASH FLOW
$1,533,254

Specifications

  • Price
    $5,300,000

  • Revenue
    $5,375,086

  • Profit Margin
    29%

  • Location
    Seattle, Washington

  • Service Area
    Seattle and the surrounding areas

  • Cash Flow
    $1,533,254

  • Equipment
    Very little equipment is needed

  • Inventory
    Inventory is ordered by project and is drop-shipped or delivered to the subcontractor

  • Down Payment
    12.5%

With little to no overhead and a 129% return on investment, this well-established company offers one-stop project management services for residential, commercial, and government clients. This business has been serving Seattle and surrounding areas since 2004, launching as a franchise in 2019 to become more community-focused; offering expert training and support for all operational aspects of the business, their company goal is 100% franchisee satisfaction. Outsourcing all facility improvements, the current team  includes 4 Project Managers, 1 Sales Representative, and 1 Project Team Admin. All hands-on work is completed by subcontractors, reducing the need for large equipment investments, inventory storage, or a large team. This asset-light company uses digital management programs to manage and execute projects, keeping up-front costs down and profit margins up. The current owner does some project management, along with oversight of operations.

 

With a well-established clientele, the company specializes in the management of construction projects which includes roofing, concrete or asphalt, turf installation, landscape construction, and snow removal.  Aside from snow removal, most services are large ticket construction services such as outdoor living spaces, concrete projects, repaving parking lots, or landscape construction.  They also provide Coronavirus Protective Services, including interior & exterior sanitation, physical barrier installation, board-up services, emergency electrical services, and emergency plumbing services.

Great growth is possible through networking and building the customer base, targeted advertising, or expanding the territory as allowed. All territories can be managed with a team of four or less, and with minimal office space per territory.

Business Highlights

Year Established:2004

Location:  Seattle, Washington

Service Area: Seattle and the surrounding areas

Services:Management of facility or home improvement projects for residential (60%) and commercial clients (40%) such as roofing, concrete or asphalt, turf installation, landscape construction, snow removal

Clients:Many recurring property managers and homeowners

Employees:6: 4 Project Managers, 1 Sales Rep, 1 Admin

Seller Training Period:6 months

Franchisee Support:Expert training and support for all operational aspects of the business

Growth Opportunities:Build territory customers, add maintenance contracts, expand territory as allowed, advertise to promote services to potential new customers

Owner’s Projected Responsibilities:Project management, oversight of operations

Equipment:Little equipment is needed

Inventory:Inventory is ordered by project and is drop-shipped or delivered to the subcontractor

Financial Highlights

  • List Price: $5,300,000

Cash Flow Analysis

Description of Financial StatementP&L StatementP&L StatementP&L StatementNotes
202020192018
GROSS SALES$5,375,086$3,853,417$3,328,519
Net Income Shown on Financial Statement$2,004,165$1,356,710$873,546
ADDBACKS
Ad Fee$-43,106$0$0
Tech Fee$-7,800$0$0
6% Franchise Royalty$-322,505$0$0
Replacement Fee$-97,500$0$0
TOTAL ADDBACKS$-470,911$0$0
Seller's Cash Flow = Total Addbacks + Net Income$1,533,254$1,356,710$873,546
Profit Margin28.53 %35.21 %26.23 %
  • Profit margin 2020: 29%
Royalty 6% on total revenue derived during each respective month, with a minimum monthly Royalty of $1,750
 
Each calendar month due not later than the 5th day following the end of the prior month. Paid to us for our ongoing support and your use of the Marks & System.
Technology Fee $650 currently, subject to period increases Monthly, when the Royalty is paid. Paid to us for use of the company website and related electronic media.
 
Advertising Fund Fee 1% of Gross Revenue for the initial 6 months and then $1,500 per month.
 
Monthly, when the Royalty is paid. Paid to us to promote the Marks and the System regionally or nationally.

 

Growth Opportunities

  • Build territory customers
  • Add maintenance contracts
  • Expand territory as allowed
  • Advertise to promote services to new potential customers

Valuation

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:

 

$1,533,254            x                3.5                 =        $5,366,389

Funding Example

Purchase Price:   $5,300,000

 

    12.5%Buyer Down Payment    $662,500 Must be unborrowed funds
    12.5%Seller Financing or Equity $662,500 5-year term at a rate of 4.50% = a monthly loan payment of $12,351
    75%Bank Loan $3,975,000 10-year term at a rate of 6% = a monthly loan payment of $44,131

 

  • Cash Flow: $1,533,254

     

  • Annual Payment:

     

    • To Seller: $148,212
    • To Bank: $529,568

       

  • Net Profit (after expenses and loan payment): $855,474

Purchase Price:

$5,300,000

$
%
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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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.