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Toronto Architecture Firm - Specialty in Mid to High-Rise Condominiums

Owner wants to stay on board and help grow the business!

CASH FLOW
$346,279

Specifications

  • Price
    $1,090,000

  • Revenue
    $1,135,674

  • Cash Flow
    $346,279

  • Location
    Toronto

  • Service Area
    Greater Toronto Area

  • Employees
    7; 1 owner/architect, 3 architects and 3 architectural technologists

  • Profit Margin
    21%

  • Reason for Sale
    Owner wants to build up the business with a partner or owner

  • Intangible Assets
    Loyal client base, well-established name, word-of-mouth referrals

The owner of this Toronto architecture firm wants to stay on board as a partner and help expand the business! With over $1.1M in projected revenue for 2021 and 2022 looking even more profitable, this firm has a 21% average profit margin. Selling at a 3.15 multiple and with a 20% seller earnout, this is a tremendous acquisition opportunity for the right buyer. A solid team is already in place; the staff of 7 works out of a 2,500 square foot office and includes the owner/architect, 1 Senior Architect, 2 Mid-Level Architects, 2 Senior Technologists, and 1 Mid-Level Technologist. The team is highly educated and experienced at their craft, allowing for solid word-of-mouth referrals and a loyal, recurring client base of developers, engineers, and general contractors. This firm has been serving the Greater Toronto Area since 2000; their portfolio primarily consists of condominiums (80%), and includes commercial, industrial, institutional, and interiors. Their spectacular designs are well-known throughout the Toronto area.

 

Priced at $1,090,000, a down payment of $163,500 returns $185,780 in the first year after debt payments – a 114% return on investment. 2021 and 2022 are looking to be extremely profitable; several projects are already in different stages of development. This is an incredible opportunity for a new owner to step in and focus on recruiting and business development, while partnering with the current owner to expand the business. This partnership will result in more work being sought after and more projects brought into the fold, giving great potential for increased revenue and business expansion.

Business Highlights

  • Year Established: 2000
  • Location:  Toronto
  • Service Area:  Greater Toronto Area
  • Services: Full-service architecture firm, primarily specializing in condominiums (80%); industrial sector, retail, mid to high-rise residential, interiors
  • Clients: Developers, Engineers, General Contractors
  • Lease: 2,500 sq. ft. office
  • Reason for Selling: Owner wants to build up the business (will roll 15% equity if buyer allows)
  • Personnel: 7; 1 owner/architect + 3 Architects and 3 Architectural Technologists
  • Seller Training Period: 3-5 years
  • Growth Opportunities: Expand the business by working as a partnership and increasing number of projects
  • Current Owner’s Responsibilities: Design & Execute projects, Business Development

Financial Highlights

  • List Price: $1,090,000 CAD

Cash Flow:

2019: $346,279

2018: $221,189

  • Assets Included in Purchase*
    • Equipment: Computers, printers, photocopiers
    • A/R: $36,979
    • Intangible Assets: Loyal client base, well-established name, word-of-mouth referrals

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

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan-June 2021
P&L StatementP&L StatementP&L StatementNotes
2021202020192018
GROSS SALES$359,650$521,340$1,135,674$1,013,304
Net Income Shown on Financial Statement$43,601$29,043$341,944$244,989
ADDBACKS
Compensation to Owner$50,000$95,000$50,000$27,000Would like to stay on board
11% Tax on total W2 Salaries$5,500$10,450$5,500$2,970
Depreciation$0$0$23,620$17,208
Life Insurance$2,700$5,400$5,400$5,400$450/month for personal life insurance
Contributions/Donations$0$0$0$0Non-onward going expense
Interest$57$58$0$0
Salary$-50,000$-100,000$-100,000$-100,000To keep owner in place
Meals & Entertainment$2,755$6,155$0$0
Computer Expenses$8,000$0$0$0Purchase new computers for staff - non onward-going
Dues/Subscriptions$1,600$0$0$0Upgraded software packages - non onward-going
Auto Expenses$8,626$17,398$19,815$23,622
TOTAL ADDBACKS$29,238$34,461$4,335$-23,800
Seller's Cash Flow = Total Addbacks + Net Income$72,839$63,504$346,279$221,189
Profit Margin20.25 %12.18 %30.49 %21.83 %

2020 was an anomaly year due to projects being put on hold. Around March 2020, two of their scheduled projects for the year were cancelled due to the unpredictable financial forecast. This forced them to downsize for a short period.

 

Invoicing for July-December 2021: $757,125

 

Total Projected 2021 Revenue: $1,116,775

 

Average Profit Margin: 21%

 

Projected 2021 Cash Flow (based on projected revenue and average profit margin): $234,523

Clients

  • Developers
  • Engineers
  • General Contractors

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

Services

  • Residential (primarily condominiums)
  • Commercial
  • Industrial
  • Institutional
  • Interiors

Personnel

  • 1 owner
  • 2 architects
  • 2 architectural draftsmen
  • 1 intern

Growth Opportunities

  • Expand the business by working as a partnership and increasing the number of projects

Valuation Details


Funding Example

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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f 402.939.0857

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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.