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Overlay, Coating & Staining for Interior Concrete

Average jobs are between $15k-$20K with a 25% profit margin!

CASH FLOW
$182,773

Specifications

  • Price
    $315,000

  • Revenue
    $720,716

  • Cash Flow
    $182,773

  • Down Payment
    10%

  • Multiplier
    1.70

  • Location
    Kansas City Metro

  • Service Area
    Kansas City Metro

  • Employees
    5 FT Laborers during the winter; up to 13 from February/March – November. Laborers are W2 employees and trained by the company.

  • Valuation
    $310,714

 

Selling at less than a 2 multiple with a 25% profit margin! There is a fully trained staff on board with this concrete services company based in Kansas City, MO. With the average job billing at $15k-$20k, this concrete polishing & finishing company has accomplished huge growth over the past 3 years. Services include concrete polishing, acid staining, decorative overlays, and methyl methacrylate (MMA) of which 95-97% are for interior projects. With 5 FT laborers on staff year-round and up to 13 depending on workload, this company completes around 4 jobs per month ranging from remodels (60%) to new construction (40%). Two owners currently handle administration, sales, orders, and training – however both of their positions could easily be absorbed into one, as each is working less than full time.

 

Based in the Kansas City Metro, 85% of jobs are completed in the local area and 15% out of town. All laborers are W2 employees and trained by the company. Currently operated remotely; an office space is not necessary to operate this business; a new owner would simply need a storage space to house the equipment and supplies. The current owners have a flexible training time frame of 3-6 months, if desired, to ensure a smooth transition. 

 

Expanding residential services would be an excellent opportunity for growth. The sellers have not fully immersed into that demographic as there is more demand than they can currently meet. A buyer could also consider offering additional services such as concrete pouring and pressure washing.

 

Business Highlights

  • Year Established: 2007
  • Location and Service Area: Kansas City Metro
  • Services: Concrete polishing, acid staining, coating, decorative overlays, methyl methacrylate (MMA)
    • 60% remodel / 40% new
    • 95 – 97% interior / 3 – 5% exterior
    • Average job bills at $10,000
    • 70% in town / 30% out of town
  • Building: Storage space for supplies and equipment would be needed. Low overhead 
  • Reason for Selling: Partnership dividing
  • Employees: 5 FT Laborers during the winter; up to 13 from February/March – November. Laborers are W2 employees and trained by the company.
  • Growth Opportunities: Pressure washing
  • Current Owner’s Responsibilities: Sales, training, scheduling, and ordering. There are 2 owners, but both of their positions could be handled by one.

Financial Highlights

  • List Price: $315,000
  • Gross Sales
    • 2019: $720,716
  • Owner Profit/Cash Flow
    • 2019: $182,773
  • YOY Growth/Sales Trends: Sales grew 102% between 2015 and 2016, with 2017 at 18% growth!

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnNotes
201920182017
GROSS SALES$720,716$958,587$684,896
Net Income Shown on Financial Statement$40,903$-5,169$-4,298
ADDBACKS
Compensation to Owner$83,180$57,880$28,964
11% Tax on total W2 Salaries$9,150$6,367$3,186
Depreciation$10,978$19,360$8,664Non-cash item
Interest$13,589$17,382$21,057non-onward going expense
Non-Business Telephone$2,940$0$3,573Personal cell phone expense
Legal Expense$21,782$1,825$11,587Non-onward going expense
Meals & Entertainment$112$90$1,986
Owner's Draw$0$0$0
Bank Charges$139$0$9,939One-time expense
TOTAL ADDBACKS$141,870$102,904$88,956
Seller's Cash Flow = Total Addbacks + Net Income$182,773$97,735$84,658
Profit Margin25.36 %10.20 %12.36 %
  • 46% growth from 2017-2018!
  • Owner has moved out of state in 2018

Services

Acid staining Decorative overlays Polished concrete
Leveling Hand grinding MMA (methyl methacrylate)
Microtoppings Stamped concrete Pressure washing
Chip & Quartz Concrete countertops Epoxy floors

 

Commercial | Residential | Interior | Exterior

Projects

  • 60% remodel
  • 40% new
  • Referral sources: Contractors and suppliers
  • 95 – 97% interior
  • 70% in Kansas City Metro
    • About once every 2 weeks, there is a job out of state
    • Team will typically travel within a 6 to 8-hour radius to a job site
  • Average job bills at $10,000
  • Most jobs take less than 1 week to complete
    • Handle about 6 jobs each week
    • 7 – 10 commercial jobs per month with some residential in between
  • Typical clients include schools, gyms, churches, and state government projects
  • Average job requires 3 – 4 Laborers

Employees

  • Laborers
  • 5 FT during the winter months
  • In season (February/March – November) there are about 13 FT Laborers
  • Trained by the company

Sellers handle sales, training, scheduling, and ordering. As they have a full staff of Laborers, the sellers rarely work on job sites, but do check in for quality assurance. Please note that both positions could be absorbed into one.

Valuation Details

The Firm Business Brokerage 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 2019 cash flow was used with a prescribed multiple is 1.7.  With this information, the computation is as follows:

$182,773         x          1.7       =          $310,714

The fair market value found above positions the business list price at $315,000.

Funding Example

Purchase Price:                             $315,000

10% Buyer Down Payment:        $31,500

10%Seller Financing:                  $31,500

80%Bank Loan:                         $252,000

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $587.

Bank Loan 10-year term at a rate of 6% equals a monthly loan payment of $2,798.

After business expenses and loan payments, a buyer with a 10% down payment of $31,500 would retain a profit of $142,153, which results in a 451% return on investment in the first year.

A lender is required to have a minimum 1.25 coverage ratio for any business loans extended. At a proposed Purchase Price of $315,000 with the terms listed above, the coverage ratio is 4.50. 

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. 

Purchase Price:

$315,000

$
%
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:
2019 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2019 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
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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.