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Mechanical Engineering for Government Projects

Owner does employee oversight with no billable hours and will stay on for 1-2 years!

CASH FLOW
$511,893

Specifications

  • Price
    $1,300,000

  • Revenue
    $1,716,877

  • Location
    San Diego County California

  • Reason for Sale
    Retirement Planning

  • Service Area
    20% California, 80% National

  • Lease
    3,000 sq. ft. universal office space including 9 workstations

  • Employees
    6: 2 Engineers, 3 Project Managers, 1 Office Manager

  • Intangible Assets
    Experienced professional team with high level knowledge and qualifications

  • Multiplier
    3.50

 

Owner does employee oversight with no billable hours and will stay on for 1-2 years! Serving municipal, governmental, institutional, commercial, and industrial clients, this business provides expertise in the areas of facility maintenance, alternative energy contracting, commissioning, and engineering.  This business provides professional services to municipal, governmental, institutional, commercial, and industrial clients. With existing multi-year projects and an average sale size of $2.5MM, this company has over $1MM in progress and over $1MM in the pipeline. A 12% down payment of $156,000 returns $184,518 in the first year after debt payments!  Specializing in the overall planning, coordinating, and controlling of a project from beginning to completion, licensed professional engineers offer solutions to clients’ specific building requirements. Their facility maintenance specialists are capable of HVAC & electrical work, landscaping & grounds maintenance, safety inspections, and more. As an alternative energy contractor, they can provide properties with efficient and effective energy solutions.

 

The team of six includes two engineers, three project managers, and one office manager.  The firm’s owner and senior staff are recognized professional leaders in their respective areas of expertise and have extensive experience with national and local organizations.

 

Growth opportunities include the addition of staff dedicated to writing and responding to proposals as well as pursuing policy writing with the federal government.

Business Highlights

  • Year Established: 2012
  • Location: San Diego County California
  • Service Area: 20% California, 80% National
  • Clients: Municipal, governmental, institutional, commercial, and industrial clients
  • Services: Engineering services, commissioning, construction management and alternative energy contracting (50%); Facility maintenance (50%)
  • Lease: 3,000 sq. ft. universal office space including 9 workstations
  • Reason for Selling: Retirement planning
  • Employees: 6: 2 Engineers, 3 Project Managers, 1 Office Manager
  • Seller Training Period: 1-2 years
  • Growth Opportunities: Adding additional staff dedicated to writing and responding to proposals as well as policy writing with the federal government
  • Current Owner’s Responsibilities: Employee oversight with no billable hours

Financial Highlights

  • List Price: $1,300,000
  • Gross Sales:
    • 2019: $1,716,877
    • 2018: $1,773,520
    • 2017: $1,409,909
  • Cash Flow:
    • 2019: $511,893
    • 2018: $237,569
    • 2017: $358,095
  • Assets Included in Purchase*
  • Equipment: Furniture, Fixtures & Equipment
  • WIP: $1MM
  • Pipeline: $1MM
  • Intangible Assets: Experienced professional team with high level knowledge and qualifications

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnP&L StatementNotes
2019201820172016
GROSS SALES$1,716,877$1,773,520$1,409,909$1,559,724
Annualized
Net Income Shown on Financial Statement$183,957$121,344$82,255$91,320
ADDBACKS
Compensation to Owner$0$165,000$120,000$115,000
11% Tax on total W2 Salaries$0$18,150$13,200$12,650
Depreciation$0$14,406$17,146$17,876
Interest$0$2,306$25,093$20,481
Amortization$0$349$349$349
Utilities$5,472$6,014$7,418$8,407Only electric ($150/month) and internet ($100/month) will carry over
Legal Fee$412,464$0$182,634$0
Replacement cost$-90,000$-90,000$-90,000$-90,000
TOTAL ADDBACKS$327,936$116,225$275,840$84,763
Seller's Cash Flow = Total Addbacks + Net Income$511,893$237,569$358,095$176,083
Annualized
Profit Margin29.82 %13.40 %25.40 %11.29 %
.

Typical Clients

  • Municipalities
  • Governmental
  • Institutional
  • Commercial
  • Industrial

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

Services

  • Engineering Services

    Provides Licensed Professional Engineers (PE) who are experienced and well-versed in the architectural, civil engineering, electrical, mechanical, and structural fields. Offers solutions to building requirements that assist local and state organizations with the design, installation, commissioning, and maintenance of utility systems. Projects are managed by experienced personnel who monitor the quality of services provided by onsite technicians. They also provide complete owner representation and serve as the commissioning agent on systems designed and installed to meet LEED requirements. With the experience to identify multiple engineering issues with the facility, they are able to accurately make recommendations for effective resolution. Engineering services can be utilized for construction projects in the pre-design, design, construction, acceptance, and past occupancy phase.

  • Commissioning Services

    As an Owner’s Rep or third-party entity, these trained professionals that are familiar with all aspects of the commissioning process can maintain our independence and perform our duties with an unbiased approach from the Pre-Design Phase through the Warranty and Post Occupancy Phase. Commissioning services include: Whole Building Commissioning (Cx), Re-Commissioning (RCx) and Retro Commissioning.

  • Construction Management Services

    This team has over 75 combined years of Construction Management experience that specializes in the overall planning, coordinating, and controlling of a project from the beginning to completion. With a focus on meeting each client’s requirements in order to develop a functionally and financially viable project, their teams are committed to ensuring that the project is completed on time and within budget while complying with approved plans and specifications.

  • Alternative Energy Services

    Provide municipal, commercial, industrial, and institutional properties with efficient and effective energy solutions.

  • Facility Maintenance

Provides multifaceted turn-key solutions for total facility operations. Their professionals provide more than just maintenance service, they build strong, lasting, working relationships with their clients so they know their facility is a top priority. Servicing and maintaining all systems for local, state, and federal customers, service technicians are experienced in troubleshooting, maintenance, and repair of building systems. Services Include:

  • HVAC & Electric
  • Landscaping & Ground Maintenance Services
  • Fire & Life Safety Services
  • Janitorial Services
  • Tenant Improvements

Employees

  • 2 Engineers
  • 3 Project Managers
  • 1 Office Manager

Growth Opportunities

  • Addition of staff dedicated to writing and responding to proposals
  • Pursuing policy writing with the federal government

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 multiple is prescribed 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 3-year average cash flow was used with a prescribed multiple of 3.5.  With this information, the computation is as follows:

$369,186         x          3.5       =          $1,292,151

The fair market value found above positions the business list price at $1,300,000.

Funding Example

 

Purchase Price:                          $1,300,000

12%Buyer Down Payment:      $156,000

10%Seller Financing:                $130,000

78%Bank Loan:                      $1,014,000

Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $2,064.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $13,325.

After business expenses and loan payments, a buyer with a 12% down payment of $156,000 would retain a profit of $184,518 which results in a 118% 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 $1,300,000 with the terms listed above, the coverage ratio is 2.00. 

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 Business Brokerage 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:

$1,300,000

$
%
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:
3 Yr. Ave. Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
3 Yr. Ave. 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.