Opportunities
Management of Residential & Commercial Improvement Projects
With little to no overhead and a 129% return on investment!
Specifications
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 Statement | P&L Statement | P&L Statement | P&L Statement | Notes |
| 2020 | 2019 | 2018 | ||
| 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 Margin | 28.53 % | 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
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: | % |
Attachments
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