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Opportunities

Structural Engineering with Focus on Tract Housing & Retaining Walls

With a 63% profit margin and 70+ recurring clients!

CASH FLOW
$2,005,536

Specifications

  • Price
    $6,400,000

  • Revenue
    $2,685,151

  • Cash Flow
    $2,005,536

  • Location
    Las Vegas, Nevada

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

  • Profit Margin
    63%

  • Employees
    7; includes a Senior Project Manager & a Drafter

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

  • Reason for Sale
    Industry Consolidation

With a 4-year average profit margin of 63%, this structural and offsite civil engineering firm has 70+ recurring clients!  The sellers of this well-established firm will roll 20% equity and stay on board for up to 5 years. The majority of their recurring clients have been with them for a minimum of 8 years. Their client base is comprised of contractors, developers, architects, engineers, and owner-builders, Established since 2006, approximate sale size ranges from $20k-$60k for residential projects and $2k-$3k for the offsite civil structures. The hot residential market in Las Vegas has propelled this firm’s business to focus and specialize in custom, tract, and multifamily homes, as well as offsite civil structures. The team includes the 3 owners, who are licensed professional engineers (CE), 1 Senior Project Manager, 1 Drafter, and 2 regular professionals subcontracted as needed. The new owner would not need to be a licensed engineer; there would just need to be one on staff to stamp the drawings, designs, plans, etc.  

 

The firm works out of a 4,000 sq. ft. building with 7 offices, a conference room, meeting room, IT room, and a bullpen with 6-cubicle workstations and a production area. The owners of the business also 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 $6,400,000, the growth potential for this firm is substantial. With the constant influx of population, the Las Vegas construction market is booming with design demand in every sector. This demand yields several untapped markets in the region that this firm simply does not currently have the manpower to explore. A larger firm looking to expand into this hot market, or an existing firm that offers different services, could seamlessly merge with this versatile and well-recognized company to increase market share, and exponentially boost revenue. Having established a great reputation, this firm’s current marketing practice consists entirely of word-of-mouth advertising. So, updating their website, creating a social media presence, and implementing a marketing strategy could also lead to continued growth.

Business Highlights

Year Established: 2006

Location: Las Vegas, Nevada

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

Services: Structural engineering (custom homes, residential tract housing, multi-family miscellaneous structures, etc.) and offsite civil structures (retaining walls)

Clients: 70+ recurring clients: Contractors, Developers, Architectural Engineers, Owner-Builders; 80% residential, 20% commercial; majority of clients have been with them for a minimum of 5-10 years

Average Sale Size:: Ranges from $20k-$60k for residential projects and $2k-$3k for the civil retaining walls

Lease: 4,000 sq. ft. building, renovated in 2018 - $7,000/month

Reason for Selling: Industry consolidation

Personnel: 7; includes a Senior Project Manager & a Drafter

Seller Training Period: 2-5 years

Growth Opportunities: Expand services to include other engineering disciplines, implement marketing strategy, pursue untapped markets in the area such as warehouse, manufacturing, increase commercial client base

Current Owners’ Responsibilities: They manage their own individual projects and share the responsibilities for the non-billable hours. A new owner would not need to be a licensed engineer; as long as there is one on staff to stamp the drawings, designs, plans, etc.

Employees

3 Owners

  • All 3 are licensed professional engineers (CE) and manage their own individual projects with clients. They share the responsibilities for the non-billable hours.
    • 1 FT Senior Project Manager
    • 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: $6,400,000

    • 2021 Annualized Cash Flow: $2,005,536
    • Average Monthly Working Capital: $50,000

    *amounts may vary

    Cash Flow Analysis

    Description of Financial StatementP&L Statement
    Jan-May 2021
    Tax Return
    Cash
    Tax Return
    Cash
    Tax Return
    Cash
    Notes
    2021202020192018
    GROSS SALES$1,118,813$2,043,115$2,606,294$2,236,105
    Annualized$2,685,151
    Net Income Shown on Financial Statement$911,328$1,217,415$1,744,046$1,305,363
    ADDBACKS
    Compensation to Owner$92,700$283,597$271,326$216,0003 owners - all active - replacement costs below
    11% Tax on total W2 Salaries$10,197$31,196$29,846$23,760
    Depreciation$0$1,875$4,092$5,415
    Interest$0$2,715$312$0
    Auto Expense$1,666$4,000$4,000$4,000Personal Expense
    Meals & Entertainment$1,666$4,000$4,000$4,000Personal Expense
    Cell Phone$2,000$4,800$4,800$4,800Personal Expense
    Travel Expense$0$610$2,012$528Personal Expense
    Season Tickets$0$0$0$140,000One-time cost
    Rent$3,583$38,000$0$41,500FMV is $46k
    Replacement/Retainage Salary$-187,500$-450,000$-450,000$-450,000$150k per owner to either keep on board or replace
    Office Supplies (Personal)$0$10,824$18,090$4,948Non-onward going expense
    TOTAL ADDBACKS$-75,688$-68,383$-111,522$-5,049
    Seller's Cash Flow = Total Addbacks + Net Income$835,640$1,149,032$1,632,524$1,300,314
    Annualized
    Profit Margin74.69 %56.24 %62.64 %58.15 %

    • 2021 will be greater than or equal to 2019 – there is already nearly $1.1M in sales as of May 31, 2021.

    Valuation

    Funding Example

    Growth Opportunities

    • Expand services to include mechanical engineering or other disciplines.

       

    • Implement marketing strategy

       

    • Pursue untapped markets in the area

    Purchase Price:

    $6,400,000

    $
    %
    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:
    4-year average cash flow
    $
    Annual Debt Service: $
    RATIO:

    Buyer's Net Operating Income (NOI)

    The amount of money the Buyer will retain as profit.

    Cash Flow:
    4-year average 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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    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.