Residential & Civil Structural Engineering Firm in Las Vegas
With a 62% profit margin and 97% recurring client base!
With a 62% profit margin and 97% recurring client base, this structural engineering firm in Las Vegas has been well-established for 15 years! Specializing in local residential and civil engineering projects, the client base for this company is comprised of contractors, developers, architectural engineers, and owner-builders. Services are mostly in the residential sector, including retaining walls, high-end custom homes, residential tract housing for developers, and multi-family tract homes; their civil engineering services is primarily retaining wall projects, which are incredibly lucrative, as they are in high demand and the turnaround is quick on those projects. With 70 current clients, their sale size ranges from $20k-$60k for residential projects and $2k-$3k for the civil retaining walls. The team includes the 3 owners, who are licensed engineers, 1 autonomous key employee, 1 part-time drafter, and 2 regular professionals subcontracted as needed. All three owners are willing to stay on for 1-2 years to ensure a smooth transfer of client relationships.
The team works out of a 4,000 sq. ft. building with 7 offices, a conference room, meeting room, IT room, and a bullpen 6-cubicle workstation used as a production area. The owners of the business own the building through a separate entity and lease it to themselves for $7,000/month. A fair market rate for rent would be in the $4,000/month range.
Priced at $7,250,000, the growth potential for this firm is substantial. An existing engineering firm that offers different services could seamlessly merge with this versatile and well-recognized company to exponentially boost revenue. There are a number of untapped markets in the region that this firm simply does not have the manpower to take on. Las Vegas is extremely busy in the construction sector, as the population is booming, and there is a high demand for warehouse manufacturing as well. Updating their website, creating a social media presence, and implementing a marketing strategy would also lead to continued growth.
Year Established: 2006
Location: Las Vegas, Nevada
Service Area: Primarily Las Vegas (93%) and California (7%)
Services: Residential engineering (high-end custom homes, residential tract housing, multi-family tract homes, etc.) and Civil Engineering (retaining walls)
Clients: Contractors, Developers, Architectural Engineers, Owner-Builders; 80% residential, 20% commercial
Lease: 4,000 sq. ft. building, renovated in 2018 - $7,000/month
Reason for Selling: Pursuing other ventures
Personnel: 4 FT W2 employees (including 3 owners), 1 PT Drafter, 2 subcontracted professionals as needed
Seller Training Period: 1-2 years
Growth Opportunities: Expand services to include mechanical engineering, implement marketing strategy, pursue untapped markets in the area such as warehouse manufacturing, increase commercial client base
Current Owners’ Responsibilities: All 3 owners are licensed engineers; they manage their own individual projects and share the responsibilities for the non-billable hours
- All 3 are licensed engineers and manage their own individual projects with clients. They share the responsibilities for the non-billable hours.
- 1 FT Employee
- Not licensed, but completely autonomous; the owners juts have to stamp his work
1 PT Drafter (went to PT during Covid – expected to return to FT)
10 owner family members are PT W2 employees for tax purposes (would not need replaced)
2 professionals subcontracted as needed
- The company has an average profit margin of 58% over the last 5 years!
- List Price: $7,250,000
- 2019 Cash Flow: $1,614,434
- Average Monthly Working Capital: $50,000
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
Jan-Nov 2020 - Cash
|Net Income Shown on Financial Statement||$1,319,940||$1,744,046||$1,305,363||$1,065,218||$865,104|
|Compensation to Owner||$198,386||$271,326||$216,000||$238,611||$251,267||3 owners - all active - replacement costs below|
|11% Tax on total W2 Salaries||$21,822||$29,846||$23,760||$26,247||$27,639|
|Auto Expense||$3,667||$4,000||$4,000||$4,000||$4,000||Personal Expense|
|Meals & Entertainment||$3,667||$4,000||$4,000||$4,000||$4,000||Personal Expense|
|Cell Phone||$4,400||$4,800||$4,800||$4,800||$4,800||Personal Expense|
|Travel Expense||$610||$2,012||$528||$0||$0||Personal Expense|
|Season Tickets||$0||$0||$140,000||$0||$0||One-time cost|
|Rent||$31,583||$0||$41,500||$-18,250||$-5,000||FMV is $46k|
|Replacement/Retainage Salary||$-412,500||$-450,000||$-450,000||$-450,000||$-450,000||$150k per owner to either keep on board or replace|
|Seller's Cash Flow = Total Addbacks + Net Income||$1,171,575||$1,614,434||$1,295,366||$883,293||$712,502|
|Profit Margin||59.44 %||61.94 %||57.93 %||58.49 %||52.97 %|
Owner Profit / Cash Flows
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 2019 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:
$1,614,434 x 4.5 = $7,264,953The Fair Market Value found above positions the business
Purchase Price: $7,250,000
|10%Buyer Down Payment||$725,000||Must be unborrowed funds|
|30%Seller Financing or Equity||$2,175,000||5-year term at a rate of 4.50% = a monthly loan payment of $40,549|
|60%Bank Loan||$4,350,000||10-year term at a rate of 6% = a monthly loan payment of $48,294|
- Cash Flow: $1,614,434
- Annual Payment:
- To Seller: $486,583
- To Bank: $579,527
- Net Profit (after expenses and loan payment): $548,324
- Expand services to include mechanical engineering or other disciplines.
- Implement marketing strategy
- Pursue untapped markets in the area
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|
This folder is empty.
Access to this Deal Room is restricted
Would you like to access the deal room?Yes, please
Already have an account? Log in here.
Print, sign and send to:210 N 78th St. 2nd Floor
Omaha, NE 68114
Or fax to: