Opportunities
Multi-Location Architecture Firm – Nearly $17M in Sales
Sold
Over 80 employees – owners will stay on board for 2-10 years!
Specifications
With over 80 employees in place, this multi-location architecture firm’s owners will stay on board for 2-10+ years! Established in 1973, the business has a 3-year average cash flow of $2.7M and a 16% average profit margin. Serving regionally in Pennsylvania, Delaware, New Jersey, and Maryland, the firm specializes in in architecture (75%), interior design (20%), and landscape architecture. The majority of their client base is in the private sector, with a significant portion of those being developers for individual corporate clients and higher education. Their highly skilled team of many long-tenured employees includes the 7 owners, 20 Registered Architects, 6 Senior Architectural Designers, 20 Intern Architects, 14 Interior Designers, 2 in Landscape Architecture, and 9 Operations Associates; all staff members serve firm-wide functions. The owners have identified five future leaders of the firm, as well as additional staff who they believe have the aptitude to grow into leadership roles in the future.
The firm is known for providing top-notch architecture and design services in the area for 47 years. Due to the diversity of the market sectors they serve, they fared exceptionally well in 2020 compared to some of their peers who are more specialized. Their 2020 revenue nearly matched 2019, and with the help of a PPP loan that was 100% forgiven, they were able to maintain their staff level with no reduced hours or furloughs.
Priced at $11,750,000, there is immense growth potential through a smaller bolt-on acquisition, and a new owner could expand the market share in healthcare and senior living. The current owners want to establish an economically sustainable model for the purchase of shares from the three principals who will reach retirement age within the next 3 to 7 years. A sale could also provide the opportunity for enhanced growth.
Business Highlights
- Year Established: 1973
- Location: Multi-Location in Pennsylvania
- Service Area: Pennsylvania, Delaware, New Jersey & Maryland
- Services: Architecture (75%) Interior Design (20%) & Landscape Architecture (5%)
- Clients: Developers, contractors, corporate end-users, public & private institutions
- Projects: Approximately 300 active projects
- Building: Site 1: 10,671 sq. ft.; Site 2: 5,842 sq. ft.; Site 3: 4,682 sq. ft. (currently expanding)
- Reason for Selling: Aging partners, strategic exit
- Personnel: 82 employees including 7 owners, 46 Architecture Associates, 14 in Interior Design, 2 in Landscape Architecture, and 9 Operations Associates
- Seller Training Period: All owners will stay 3-10 years
- Growth Opportunities: Growth through smaller bolt-on acquisitions, expanding market share in healthcare and senior living, increase landscape architecture projects
Financial Highlights
- List Price: $11,750,000
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Jan-June 2021 | P&L Statement Jan-Dec 2020 | Tax Return Cash | Tax Return Cash | Notes |
| 2021 | 2020 | 2019 | 2018 | ||
| GROSS SALES | $8,022,118 | $16,840,806 | $17,322,177 | $17,745,051 | |
| Net Income Shown on Financial Statement | $1,329,697 | $1,519,285 | $3,476,976 | $3,281,356 | |
| ADDBACKS | |||||
| Depreciation | $0 | $0 | $3,912 | $3,912 | |
| Interest | $2,856 | $9,996 | $8,349 | $24,404 | |
| Amortization | $0 | $0 | $18,600 | $18,600 | |
| Contributions/Donations | $4,390 | $6,955 | $0 | $0 | |
| Life Insurance | $40,094 | $57,513 | $39,000 | $33,000 | |
| Bonuses | $-199,455 | $0 | $-521,546 | $-492,203 | 15% of net income |
| Owner Wages | $-62,363 | $1,027 | $-20,968 | $22,275 | $1,178,000 onward going (direct, indirect, 54% job cost variance) |
| Furniture Loan | $17,206 | $33,225 | $0 | $0 | Non-onward going |
| Bad Debt | $58,548 | $-47,021 | $0 | $0 | Non-onward going |
| Shareholder Buy-out | $0 | $0 | $190,760 | $165,760 | AAB note payable & AAB comp |
| Rent | $-42,000 | $-84,000 | $-84,000 | $-84,000 | Rent of one location raising by $7k/month |
| PPP Bonus | $0 | $493,855 | $0 | $0 | $493k to SH, $494,710 to staff; adding back 50% b/c only paid out due to COVID |
| Event Sponsoring | $28,345 | $12,950 | $50,004 | $39,115 | Non-onward going |
| Software | $-17,000 | $-34,000 | $-34,000 | $-34,000 | Was $6k/year, will be $40k/year onward going |
| Prepaid Software | $0 | $34,000 | $0 | $0 | Prepaid for 2021 |
| Profit Sharing | $8,500 | $17,000 | $17,000 | $17,000 | Paid to shareholders |
| TOTAL ADDBACKS | $-160,879 | $501,500 | $-332,889 | $-286,137 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $1,168,818 | $2,020,785 | $3,144,087 | $2,995,219 | |
| Profit Margin | 14.57 % | 12.00 % | 18.15 % | 16.88 % |
Clients
- Senior Living
- Multifamily
- Single-Family
- Healthcare
- Higher Education
- Corporate
- Industrial/Warehousing
- Retail
- Hospitality
- Civic & Cultural
3 Major Service Offerings
- The majority are in the private sector, a significant portion of those are developers – individual corporate clients, higher education, and some public work for Delaware county and the State of Delaware (not their primary focus).
- 75% architecture, then 15-20% interiors (20 people in this group) but largely this is not a standalone project; it’s usually a part of the architecture work that they do. Landscape architecture has room for expansion, some independent projects.
- Consciously they have not established an engineering vertical because they work well with their engineering contractors and they choose which engineers will be working on the project.
Personnel
78 employees:
- 7 Principals/Shareholders
- 20 Registered Architects
- 6 Senior Architectural Designers
- 20 Intern Architects
- 5 Senior Interior Designers
- 9 Interior Designers
- 1 Registered Landscape Architect
- 1 Intern Landscape Designer
- 3 Marketing & Business Development Associates
- 2 Accounting Associates
- 3 Administrative Associates
- 1 Information Technology Associate
In addition to the staff Landscape Architect, one principal is a Registered Landscape Architect
All staff serve firm-wide functions.
The Principals have identified 5 future leaders of the firm and will be promoting these staff members in 2020. They have also identified addition staff who they believe have the aptitude to grow into leadership roles in the future.
Tenure & Recruiting:
- Mentoring Program: trains people – when they leave, it’s typically due to a life cycle event. For recruitment, they visit college campuses of several different schools to recruit.
“There are multiple reasons we are considering a sale. From a financial perspective, we want to establish an economically sustainable model for the purchase of shares from the three principals who will reach retirement age within the next 3 to 7 years. A sale could also provide the opportunity for enhanced growth.”
~Majority Owner
Growth Opportunities
- Growth through smaller bold-on acquisitions
- Expand market share in healthcare and senior living
- Increase landscape architecture projects
Revenue by Market Sector
Valuation
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857