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Residential & Civil Structural Engineering Firm in Las Vegas

With a 62% profit margin and 97% recurring client base!

CASH FLOW
$1,614,434

Specifications

  • Price
    $7,250,000

  • Revenue
    $2,606,294

  • Cash Flow
    $1,614,434

  • Location
    Las Vegas, Nevada

  • Service Area
    Primarily Las Vegas (93%) and California (7%)

  • Profit Margin
    62%

  • Employees
    4 FT W2 employees (including 3 owners), 1 PT Drafter, 2 subcontracted professionals as needed

  • Intangible Assets
    Well-established in the area, solid reputation, 97% recurring client base, word-of-mouth referrals

  • Reason for Sale
    Pursuing other ventures

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.

Business Highlights

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

Employees

3 Owners

  • 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

    Service Breakdown

    Profit Margin

    • The company has an average profit margin of 58% over the last 5 years!

    Financial Highlights

    • 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 StatementP&L Statement
    Jan-Nov 2020 - Cash
    Tax Return
    Cash
    Tax Return
    Cash
    Tax Return
    Cash
    Tax Return
    Cash
    Notes
    20202019201820172016
    GROSS SALES$1,970,895$2,606,294$2,236,105$1,510,144$1,344,875
    Annualized$2,150,067
    Net Income Shown on Financial Statement$1,319,940$1,744,046$1,305,363$1,065,218$865,104
    ADDBACKS
    Compensation to Owner$198,386$271,326$216,000$238,611$251,2673 owners - all active - replacement costs below
    11% Tax on total W2 Salaries$21,822$29,846$23,760$26,247$27,639
    Depreciation$0$4,092$5,415$5,415$8,950
    Interest$0$312$0$3,252$1,742
    Auto Expense$3,667$4,000$4,000$4,000$4,000Personal Expense
    Meals & Entertainment$3,667$4,000$4,000$4,000$4,000Personal Expense
    Cell Phone$4,400$4,800$4,800$4,800$4,800Personal Expense
    Travel Expense$610$2,012$528$0$0Personal Expense
    Season Tickets$0$0$140,000$0$0One-time cost
    Rent$31,583$0$41,500$-18,250$-5,000FMV is $46k
    Replacement/Retainage Salary$-412,500$-450,000$-450,000$-450,000$-450,000$150k per owner to either keep on board or replace
    TOTAL ADDBACKS$-148,365$-129,612$-9,997$-181,925$-152,602
    Seller's Cash Flow = Total Addbacks + Net Income$1,171,575$1,614,434$1,295,366$883,293$712,502
    Annualized
    Profit Margin59.44 %61.94 %57.93 %58.49 %52.97 %
    Profit Margin: 62%

    Owner Profit / Cash Flows

    Valuation

    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                 =    $7,264,953

    The Fair Market Value found above positions the business 

    Funding Example

    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

    Growth Opportunities

    • Expand services to include mechanical engineering or other disciplines.

       

    • Implement marketing strategy

       

    • Pursue untapped markets in the area

    Purchase Price:

    $7,250,000

    $
    %
    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
    Omaha, NE 68114

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