Absentee Architecture/Interior Design Firm with 30+ Employees
With a new, beautiful office, showroom, and virtual reality experience, this outstanding architecture and design firm is creating an unparalleled cutting-edge experience for its customers. For over 25 years, the firm has been providing exceptional services to commercial, multi-family and healthcare clients across the nation and is on an impressive growth trajectory. With a focus on “value-adds” for clients, the firm has consistently extended its scope of services to include interior design, architecture, furniture dealership, move-management, branding/marketing and environmental graphics. As an all-inclusive turnkey source, the firm has better control over its margins, has far outpaced its competition, and has built strong relationships with major developers in over 25 states.
With considerable investment and R&D, the firm has developed an exclusive virtual reality design process, prevuVRÔ. This trademarked process expedites the design/architectural process by months by allowing clients to experience, revise, and approve projects before actual build-out. prevuVRÔ is an extremely valuable marketing property as no other firm offers it. The firm also offers 3D Laser Scanning to clients for more efficient space auditing.
Located in a premiere location in the Indiana, office space was recently renovated and features the latest technologies and furnishings for its 30+ staff. The current owner works 75% of the time, but most duties can be absorbed by the current staff.
- Year Established: 1989
- Location: Indiana
- Service Area: National clientele
- Services: Interior design, architecture services, furniture retail, project management, branding
- Client Demographics: Commercial, corporate, healthcare, and multi-family builders
- Building: 9,000 sq. ft. of premier space, newly renovated, showroom, open workspace, office, huddle rooms, conference rooms, café, mothers room, design library and virtual reality studio.
- Reason for Selling: Retirement
- Employees: 30 employees: architects (5), sales, interior designers (16)
- Seller Training Period: 90 days transition
- Growth Opportunities: Increase furniture sales, expand client base, increase VR exposure
- Current Owner’s Responsibilities: Works ¾ time, business runs smoothly when the owner is absent
- List Price: $2,600,000
- Gross Sales:
- 2018: $6,739,337 Annualized
- 2017: $4,812,182
- 2016: $4,312,404
- 2015: $2,544,244
- Cash Flow:
- 2018: $1,433,486 Annualized
- 2017: $499,458
- 2016: $235,280
- 2015: $346,923
- Assets Included in Purchase*
- o Equipment: $293,966: furniture, fixtures, computers, and software
- o Inventory: $16,000
- o A/R: May 2018: $587,792
- o Pipeline Margin Projections: $700,000+ (furniture and service)
- o Build-out: $65,590
- o Intangible Assets: Reputation for innovation, positive name recognition, long-standing relationships with clients, highly-trained and knowledgeable staff
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
Cash Basis Jan-July
|P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$696,782||$23,117||$130,339||$263,980||$341,289|
|Compensation to Owner||$43,750||$92,415||$100,248||$96,551||$70,215|
|Meals & Entertainment||$17,684||$23,186||$7,835||$6,283||$8,425|
|Life Insurance - Owner||$2,943||$9||$86||$80||$78|
|Short Term Disability Insurance - Owner||$327||$721||$560||$436||$373|
|Supplemental Insurance - Owner||$1,013||$1,736||$1,736||$1,591||$1,736|
|Personal Memberships||$18,000||$27,000||$0||$0||$0||2 Vistage Memberships|
|CPA Software Fees||$0||$46,140||$0||$0||$0||New CPA Firm - onward going cost will be $7,500/year|
|Legal||$2,500||$7,500||$0||$0||$0||One Time Expense|
|Business Consulting||$45,000||$4,495||$33,783||$26,865||$26,463||Not onward going|
|Relocation||$1,047||$91,894||$0||$0||$0||Not onward going|
|Base Salary||$-33,333||$-50,000||$-50,000||$-50,000||$-50,000||Onward going salary|
|Additional Salary||$0||$53,353||$0||$0||$0||Owner daughter (short time frame) no replacement needed|
|Signage for New Location||$0||$5,308||$9,344||$0||$0||Not onward going|
|Relocation Expenses||$0||$91,894||$0||$0||$0||Line Item #8845|
|Relocation Office Equipment||$0||$12,247||$0||$0||$0||Line Item #9081|
|Seller's Cash Flow = Total Addbacks + Net Income||$836,200||$499,458||$235,280||$346,923||$399,024|
|Profit Margin||21.27 %||10.38 %||5.46 %||13.64 %||8.86 %|
- 200 jobs completed for clients in 2017 alone!
- Projected 2018 profit margin: 20%
- The large change in net income was due to a large collection of accounts receivable since December 2017.
- Commercial clients
- Corporate client/landlords
- Healthcare clients
- Multi-family developers
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Architecture services and Interior design
- Interior and exterior
- Space planning
- Virtual reality emersion
- 3D renderings
- Furniture and finishes
- Furniture retail
- Design assistance
- Shipped directly to site
- Over 200 negotiated lines
- Branding and marketing
- Cohesive look from marketing to building design
- Logo development
- Web site design
- Marketing materials
- Project management
- VR emersion, renderings, fly through, application for Google Cardboards
- Laser scanner for total existing building measurement
- 30 employees
- Architects (5)
- Sales (4)
- Interior Design (16)
- Increase furniture sales
- Expand client base
- Increase VR exposure
- Expand industries served
The Firm Business Brokerage 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 multiple is prescribed 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 multiple.
For this business, a 5-Year Average Cash Flow was used with a prescribed multiple is 4.47. With this information, the computation is as follows:
$582,834 x 4.47 = $2,605,268
The Fair Market Value found above positions the business List Price at $2,600,000.
Purchase Price: $2,600,000
15% Buyer Down Payment: $390,000
15% Seller Financing: $390,000
70% Bank Loan: $1,820,000
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $7,271.
Bank Loan 10-year term at a rate of 6% equals a monthly loan payment of $20,206.
After business expenses and loan payments, a buyer with a 15% down payment of $390,000 would retain a profit of $169,740, which results in a 44% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $2,600,000 with the terms listed above, the coverage ratio is 1.51.
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.
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.
5-Year Average Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
5-Year Average Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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Omaha, NE 68114
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