Remodeling & Finish Carpentry since 1992
Kitchen & bath remodels with $1M in sales!
With over $1MM in sales in 2019, this well-established business specializes in kitchen and bath remodels, additions, finish carpentry, and custom cabinetry design and installation. Serving Lincoln and surrounding communities for nearly 30 years, this highly skilled design staff offers an unmatched experience from beginning to end. Clients include remodeling homeowners looking for a tune-up or additions, and residential/commercial contractors looking for interior finishes in a newly built home. An office manager is already in place, handling all incoming phone calls and e-mails from new and existing clients, as well as quoting, invoicing, scheduling, and ordering. A project manager runs the jobs on site, and 6 experienced laborers make sure the work is top notch from start to finish.
Home remodeling and additions account for 50% of their revenue, 40% is finish carpentry, and 10% custom cabinetry. The company already has $800,000 in signed contracts for 2020, with much more expected in the pipeline through their valued homebuilders. Assets include $78,000 worth of portable equipment, shop equipment, and hand tools used by three crews of laborers.
Growth opportunities are endless. Adding another project manager would allow the company to take on more jobs, as home remodeling and additions is an industry that is in constant high demand.
- Year Established: 1992
- Location: Lincoln, NE
- Service Area: Lincoln and surrounding communities within 30-mile radius
- Clients: Remodeling homeowners & residential/commercial contractors
- Services: Kitchen/bath remodels, additions, finish carpentry, custom cabinetry
- Lease: 3,500 square feet
- Reason for Selling: Retirement Planning
- Personnel: 9: 1 owner, 1 office manager, 1 project manager, 6 laborers
- Seller Training Period: 6 months-1 year
- Growth Opportunities: Add another project manager to take on more remodels
- Current Owner’s Responsibilities: Works 30 hours/week; Meeting with staff, initial meetings with clients and project manager, visiting job sites at various stages of the project for quality assurance
- List Price: $590,000
- Gross Sales:
- 2019: $1,012,934
- 2018: $718,094
- 2017: $615,674
- 2016: $604,870
- Cash Flow:
- 2019: $181,474
- 2018: $172,390
- Assets Included in Purchase: $78,000
- Equipment: $24,000 in portable equipment, $30,000 in shop equipment, $24,000 in hand tools for three crews
- Equipment includes 12 enclosed H&H Trailers, 2 job site DeWalt table saws, 3 DeWalt 10” compound miter saws, 2 Bosch 12” axial arm compound miter saws, 2 scissor lift tables, scaffolding, various miscellaneous tools
- A/R, Secured Work, Pipeline: $800,000 in signed contracts for 2020
- Intangible Assets: Well-established name, solid reputation, steady reoccurring business through four homebuilders
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$68,466||$100,880||$2,975|
|Compensation to Owner||$78,700||$14,000||$62,170|
|11% Tax on total W2 Salaries||$8,657||$1,540||$6,839|
|Meals & Entertainment||$1,161||$689||$698|
|Auto-Personal Use||$22,562||$23,075||$11,612||100% Personal|
|Director's Fee||$0||$28,000||$0||Paid to Owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$181,474||$172,390||$90,237|
|Profit Margin||17.92 %||24.01 %||14.66 %|
- Remodeling Homeowners
- Residential/Commercial Contractors
- Kitchen/bath remodels
- Home additions
- Finish carpentry
- Custom cabinetry
- 1 owner
- 1 office manager
- 1 project manager
- 6 laborers
- Add another project manager to allow company to take on more remodels
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 prescribed multiple is determined 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 multiplier.
For this business, the 2019 cash flow was used with a prescribed multiple of 3.25. With this information, the computation is as follows:
$181,474 x 3.25 = $589,790
The fair market value found above positions the business list price at $590,000.
Purchase Price: $590,000
10%Buyer Down Payment: $59,000
10%Seller Financing: $59,000
80%Bank Loan: $472,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,100.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $6,203.
After business expenses and loan payments, a buyer with a 10% down payment of $59,000 would retain a profit of $93,842, which results in a 159% 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 $590,000 with the terms listed above, the coverage ratio is 2.07.
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 is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2019 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2019 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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