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Residential Home Up-Keep Services with 33% Profit

Clients are largely homeowners & realtors - owner does no labor!

CASH FLOW
$339,601

Specifications

  • Price
    $1,015,000

  • Revenue
    $1,028,723

  • Cash Flow
    $339,601

  • Down Payment
    12.5%

  • Location
    Spotsylvania County, Virginia

  • Reason for Sale
    Change in career

With over 1,000 clients, primarily homeowners and realtors, the owner of this business does no labor! Offering handyman-type services since 2013, this company in Northeast Virginia has been considered a one-stop shop in the area for the last 7 years. Working 35% in residential cleaning, 30% handyman, 25% painting solutions, and 10% miscellaneous, this business offers an extensive variety of services. Selling at a 3 multiple and with a 33% profit margin, there has been consistent year over year growth in revenue and profit.  There are over 1,000 active clients in the company’s system, and they are generally adding at least one new customer each day.  These clients are able to book what they feel best fits their needs, with options for weekly, biweekly, twice weekly, monthly, or a one-time service. The team consist of 5 full-time employees with 1099’s used as needed; the current owner handles management, scheduling, and hiring, but does not do labor.

 

The business is being run from the owners’ home, so there is very low overhead in the business, allowing for over 30% profit margin year after year.  The service area is generally kept within 40 miles from the home, but they do extend a bit past that if needed for a job.  They work regularly with over a dozen realtors, who employ them for whatever jobs are needed at the time.

 

Growth opportunities include adding flooring and remodeling services and expanding the area of service.  They are not actively seeking new clients either, just using social media for marketing, so being more active on sales or setting up contracts with realtors would be a great move as well. The owners have chosen to take their lives in another direction, but they have done their best to set this company up for easy takeover!

Business Highlights

  • Year Established: 2013
  • Location:  Spotsylvania County, Virginia
  • Service Area:  Northeast Virginia
  • Services:  35% residential cleaning, 30% handyman services, 25% painting solutions, 10% misc.
  • Clients: 1,000+ - Largely homeowners & realtors
  • Reason for Selling:  Change in career
  • Personnel: 5 FT, 1099’s used as needed
  • Seller Training Period:  3-6 months
  • Growth Opportunities: Adding flooring and remodeling services; expanding area of services
  • Current Owners’ Responsibilities: Management, scheduling, hiring; no labor

Financial Highlights

  • List Price: $1,015,000
  • Gross Sales:
    • 2019: $1,028,723
    • 2018: $711,006
  • Cash Flow:
    • 2019: $339,601
    • 2018: $285,366
  • Assets Included in Purchase*
    • Equipment: General cleaning equipment, portable extractor (for dryer vents/air ducts)
    • Intangible Assets: Consistent work with realtors; great reputation

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2019201820172016
GROSS SALES$1,028,723$711,006$596,132$433,929
Net Income Shown on Financial Statement$260,944$169,011$76,928$51,723
ADDBACKS
Compensation to Owner$51,532$101,006$101,701$56,502
Tax on Owner Salary$5,669$11,111$11,187$6,215
Meals$4,822$738$1,513$1,090
Depreciation$0$0$0$0
Auto Expense$2,289$3,500$0$0
Owner's Draw$12,710$0$0$0
Gifts$1,635$0$0$0
TOTAL ADDBACKS$78,657$116,355$114,401$63,807
Seller's Cash Flow = Total Addbacks + Net Income$339,601$285,366$191,329$115,530
Profit Margin33.01 %40.14 %32.10 %26.62 %
.

Clients

  • Homeowners
  • Realtors

 

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Residential cleaning
  • Handyman services
  • Painting solutions
  • Air duct/dryer vent cleaning
  • Carpet cleaning

Personnel

  • 5 FT
  • 1099’s as needed

Growth Opportunities

  • Adding flooring and remodeling services
  • Expanding area of service
  • Setting contracts with realtors
  • Active sales
  • Increase marketing efforts

Valuation Details

 

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.  With this information, the computation is as follows:

$339,601         x          3          =          $1,018,803

The fair market value found above positions the business list price at $1,015,000.

 

Funding Example

Purchase Price:                          $1,015,000

12.5%Buyer Down Payment:   $126,875

12.5%Seller Financing:            $126,875

75%Bank Loan:                         $761,250

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,365.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $8,451.

After business expenses and loan payments, a buyer with a 12.5% down payment of $126,875 would retain a profit of $209,800, which results in a 165% 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 $1,015,000 with the terms listed above, the coverage ratio is 2.62. 

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.

Purchase Price:

$1,015,000

$
%
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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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.